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unm
Sep 5, 2007, 10:18 AM
A U.S. Treasury bond that matures in 10 years has a yield of 6%. A 10-yr corporate bond has a yield of 8%. Assume the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond? (Hint: since both bonds have the same maturity, they will have the same MRP)

Jacattackz
Sep 6, 2007, 11:01 AM
DRP = corp yield- tres yield- LP