Calculate the default risk premium on nikki g 10-year bonds

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Nikki G's Corporation's 10-year bonds are currently yielding a return of 11.97 percent. The expected inflation premium is 3.1 percent annually and the real interest rate is expected to be 3 percent annually over the next 10 years. The liquidity risk premium on Nikki G's bonds is 1.8 percent. The maturity risk premium is 0.42 percent on 3-year securities and increases by 0.15 percent for each additional year to maturity.

Required:

Calculate the default risk premium on Nikki G's 10-year bonds. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

 

Reference no: EM13301090

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