A 5 - year Treasury bond has a 4 % yield. A 1 0 - year Treasury
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Question:
A year Treasury bond has a yield. A year Treasury bond yields and a year corporate bond yields The market expects that inflation will average over the next years IP Assume that there is no maturity risk premium MRP and that the annual real riskfree rate, r will remain constant over the next years. Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP LP A year corporate bond has the same default risk premium and liquidity premium as the year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
Open spreadsheet
What is the yield on this year corporate bond? Round your answer to two decimal places
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