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1. (True/False. Explain) Bond price approaches Face Value as it moves closer to maturity. 2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds

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1. (True/False. Explain) Bond price approaches Face Value as it moves closer to maturity. 2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* - 3.0%, the inflation premium for 5-year bonds is IP - 1.75%, the liquidity premium for Keys' bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t-1)x0.1%, where t = number of vears to maturity. What is the default risk premium (DRP) on Black Sheep's bonds

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