What is the default risk premium on koy bonds

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Reference no: EM131867802

Koy Corporation's 5-year bonds yield 12.50%. The real risk-free rate is 3.0%, the inflation premium for 5-year bonds is 1.75%, the liquidity premium for Koy's bonds is 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = 0.1%(t – 1), where t = number of years to maturity. What is the default risk premium on Koy's bonds?

Reference no: EM131867802

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