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2 . Let us assume the real Rf is 5 . 5 0 % , the average future inflation rate is 1 . 5 0
Let us assume the real Rf is the average future inflation rate is a maturity premium of per year to maturity applies, ie Maturity Premium t where t is the years to maturity which means, Maturity Premium times t years Assume also that a liquidity premium of and a default risk premium of applies to Arated corporate bonds. i What is the maturity premium of the year Arated corporate bond? iiWhat is the maturity premium of the year Treasury bond? What is the yield ie the required return on a year Arated corporate bond?
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