What is the default risk premium on this? bond

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Question - Petroleos Mexicanos issued a? 30-year, 7.69% coupon bond in 2020. The annual inflation rate at that time was? 1.37%. The nominal yield on? 3-month Treasury was? 0.11% and the nominal yield on? 30-year Treasury was? 1.42%. Assume that the liquidity premium on Petroleos Mexicanos bonds is? 0.5%.

a. Given this? information, what is the default risk premium on this? bond? ?

b. Explain what this default risk premium is compensating investors for.

Reference no: EM132959028

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