1. Does Financialized Corporate Governance lead to Conflict of Interest, Failures in Financial, Markets and Macroeonomic instability, that is damaging to economic well-being – increased unemployment, price instability, high levels of federal debt?
2. The real risk-free rate, r*, is 3.1%. Inflation is expected to average 2.85% a year for the next 4 years, after which time inflation is expected to average 3.3% a year. Assume that there is no maturity risk premium. An 11-year corporate bond has a yield of 8.3%, which includes a liquidity premium of 0.45% What is its default risk premium? Round your decimals to two decimal places.