What is the default premium on this bond

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Reference no: EM13729505

A zero coupon bond has a beta of 0.15 and promises to pay $1,000 next year with a probability of 97%. If the bond defaults, it will pay nothing. One year Treasury securities are yielding 5%, and the equity premium is 7%

Refer to the information above. What is the default premium on this bond?

1.1%

6.1%

1.5%

3.3%

Reference no: EM13729505

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