What is the default risk premium on the corporate bond

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Reference no: EM13298285

If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?

a. 1.90%
b. 2.09%
c. 2.30%
d. 2.53%
e. 2.78%

Reference no: EM13298285

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