A Corporation’s 20-year bonds have an equilibrium rate of returnis 10.00 percent. For all securities, the inflation risk premium is1.63 percent and the real interest rate is 3.38 percent. Thesecurity’s liquidity risk premium is .43 percent and maturity riskpremium is .88 percent. The security has no special covenants. Whatis the bond’s default risk premium?
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