According to the Altman study, which premium is dominant in stated corporate bond yields?

Question

Quizplus · Accepted Answer

The Altman study focuses on the determinants of corporate bond yields, and found that the default premium (related to the risk of default on the bond) was the dominant factor in explaining yields. The other premiums listed (tax, liquidity, and market risk) may also have some effect on yields, but were not found to be as significant as the default premium. The Altman Z-Score model analyzes the risk of default of a company and calculates its implied default premium. Therefore, the dominant premium in stated corporate bond yields is the default premium.

According to the Altman Study, Which Premium Is Dominant in Stated