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The real risk-free rate, r*, is 1.55%. Inflation is expected to average 2.4% a year for...

The real risk-free rate, r*, is 1.55%. Inflation is expected to average 2.4% a year for the next 4 years, after which time inflation is expected to average 4.9% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 11.7%, which includes a liquidity premium of 0.55%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.

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jeff jeffy answered 2 hours ago
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