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https://deltastate.instructure.com/courses/25110/ e.com/courses/25110/quizzes/52052/take Hilpert Inc. 10-year bond, yield 5.2% and 10-year corporate bonds yield 7.5%. The maturity risk premium on a 10-year bond is 1.1% and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond? ? 1.20% 210% 1.30% 140% Question 12 6 pts A company\'s 5-year bonds are vielding 7.75% per year. Treasury bonds with the same maturity are yielding 52% per year, the real nsk-free rate tris 2.3%. The average inflation premium is 2.5%, and the maturity risk premium is estimated to be 1 x (t-1)%, where t number of years to maturity. \" the liquidity premium is 156, what is the default risk premium on the corporate bonds? 1.00 255% 155% 2 00 5 8 9 0

Solution

Question 11)

Default risk premium:

= 10-year corporate bond rate – T bond rate – Liquidity premium

= 7.5%-5.2%-0.2%

= 2.10%

Hence, correct option is 2.10%