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    Solve: Default Risk Premium on a Corporate Bond

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    Question: A treasury bond that matures in ten years has a yield of 6 percent. A 10 year corporate bond has a yield of 8 percent. Assume that the liquidity premium on the corporate bond is .5 percent. What is the default risk premium on the corporate bond?

    © BrainMass Inc. brainmass.com June 3, 2020, 9:37 pm ad1c9bdddf
    https://brainmass.com/business/bond-valuation/solve-default-risk-premium-corporate-bond-191386

    Solution Summary

    In about 20 words, this solution briefly, but concisely describes how to calculate the risk premium on a corporate bond. The required equation, along with the accompanying calculations are all provided.

    $2.19

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