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A 2-year Treasury security currently earns 2.10 percent. Over the next two years, the real risk-free rate is expected to be 1.40 percent per year
A 2-year Treasury security currently earns 2.10 percent. Over the next two years, the real risk-free rate is expected to be 1.40 percent per year and the inflation premium is expected to be 0.40 percent per year. Calculate the maturity risk premium on the 2-year Treasury security. (Round your answer to 2 decimal places.) Maturity risk premium One-year Treasury bills currently earn 1.20 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 1.40 percent. If the unbiased expectations theory is correct, what should the current rate be on 2-year Treasury securities? (Round your answer to 2 decimal places.) Current rate NikkiG's Corporation's 10-year bonds are currently yielding a return of 6.30 percent. The expected inflation premium is 1.05 percent annually and the real risk-free rate is expected to be 260 percent annually over the next ten years. The liquidity risk premium on NikkiG's bonds is 0.50 percent. The maturity risk premium is 0.35 percent on 4-year securities and increases by 0.08 percent for each additional year to maturity. Calculate the default risk premium on NikkiG's 10-year bonds. (Round your answer to 2 decimal places.) Default risk premium
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