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    What is the default risk premium on the corporate bond?

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    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?

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    https://brainmass.com/business/accounting/default-risk-premium-corporate-bond-82495

    Solution Summary

    The default risk premium on the corporate bonds are examined. The inflation expected to be average.

    $2.19

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