If 10-year T-bonds have a yield of 6.2%,10-year corporate bonds yield 11.9%,the maturity risk premium on all 10-year bonds is 1.3%,and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds,what is the default risk premium on the corporate bond?
A) 5.35%
B) 5.30%
C) 5.46%
D) 4.40%
E) 6.41%
Correct Answer:
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