Problem 64 Default Risk Premium A Treasury bond that matures

Problem 6-4 Default Risk Premium A Treasury bond that matures in 10 years has a yield of 5.5%. A 10-year corporate bond has a yield of 8%. Assume that the liquidity premium on the corporate bond is 0.5% what is the default risk premium on the corporate bond? Round your answer to two decimal places

Default risk premium = Corporate bond yield - Treasury bond yield - Liquidity premium

Default risk premium = 8% - 5.5% - 0.50%