An 11-year corporate bond has a yield of 106 which includes, Financial Management

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An 11-year corporate bond has a yield of 106 which includes

The real risk-free rate, r*, is 3.35%. Inflation is expected to average 1.95% a year for the next 4 years, after which time inflation is expected to average 3.8% a year. Assume that there is no maturity risk premium. An 11-year corporate bond has a yield of 10.6%, which includes a liquidity premium of 0.9%. What is its default risk premium? Round your answer to two decimal places.

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Financial Management: An 11-year corporate bond has a yield of 106 which includes

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Financial Management: An 11-year corporate bond has a yield of 106 which includes

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