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What is the default risk premium on kleiman bonds

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Kleiman Corporation's 5-year bonds yield 5.90% and 5-year T-bonds yield 3.65%. The real risk-free rate is r* = 2.0%, the inflation premium for 5-year bonds is IP = 1.25%, the liquidity premium for Kleiman'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 Kleiman's bonds?

Reference no: EM131537201

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