eBook The real risk-free rate, r*, is 1.7%. Inflation is expected to average 1.5% a year for the next 4 years, after which time inflation is expected to average 5.1% a year. Assume that there is no maturity risk premium. An 11-year corporate bond has a yield of 8.3%, which includes a liquidity premium of 0.3%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places. ES
eBook The real risk-free rate, r*, is 1.7%. Inflation is expected to average 1.5% a year for the next 4 years, after which time inflation is expected to average 5.1% a year. Assume that there is no maturity risk premium. An 11-year corporate bond has a yield of 8.3%, which includes a liquidity premium of 0.3%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places. ES
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 19P
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