The [real] risk-free rate is 3%. Inflation is expected to average 2% a year for the next three years and then 4% a year for the following three years. A six year corporate bond has a yield of 8%. What is the default risk premium on the corporate bond?© BrainMass Inc. brainmass.com June 3, 2020, 6:59 pm ad1c9bdddf
The default risk premium on the corporate bonds are examined. The inflation expected to be average.