What is the default risk premium (drp) on koys bonds

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Reference no: EM133265049

Koy Corporation's 5-year bonds yield 8.00%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 3.10%, the inflation premium for 5-year bonds is IP = 1.30%, the liquidity premium for Koy's bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) × 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Koy's bonds?

Reference no: EM133265049

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