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8. Problem 6.17 (Interest Rate Premiums) A 5-year Treasury bond has a 5.2% yield. A 10-year Treasury bond yields 6.0%, and a 10 -year corporate

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8. Problem 6.17 (Interest Rate Premiums) A 5-year Treasury bond has a 5.2% yield. A 10-year Treasury bond yields 6.0%, and a 10 -year corporate bond yields 8.5%. The market expects that inflation mit average 2.45 ever the next 10 years (P10=2.4%). Assume that there is no maturity risk premium (MRP =0) and that the annual real risk-free rate, r, mill remain constant over the next to years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP=LP=0. ) A.5-year corporate bond has the same defait risk premium and liquidity premium as the 10 -year corporate bond deseribed. What is the yield on this 5 -year corporate bond? Round your answer to ene decimal place

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