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2. value: 10.00 points You are considering an investment in 20-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street
2. value: 10.00 points You are considering an investment in 20-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that one-year T-bills are currently earning 0.50 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate Default risk premium Liquidity risk premium Maturity risk premium 0.41% 1.05% 0.90% 0.75% - = = a. What is the inflation premium? (Round your answer to 2 decimal places. (e.g., 32.16)) Inflation premium b. What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places. (e.g., 32.16)) Fair interest rate References eBook &Resources
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