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Compute the default risk premium associated with bonds

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Reference no: EM133272890

Currently, a one-year Treasury bill is yielding 3.6 percent. Company F's three-year bond has a yield equal to 5.5 percent, and its seven-year bond has a yield equal to 5.9 percent. Although none of the bonds has a liquidity premium, any bond with a maturity equal to one year or longer has a maturity risk premium (MRP). Except for their terms to maturity, the characteristics of the bonds are the same.

Compute the annual MRP associated with the bonds.

________%

Compute the default risk premium (DRP) associated with the bonds.

_______-%

Reference no: EM133272890

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