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A 5-year Treasury bond has a 4,35% yleld. A 10-year Treasury bond ylelds 6,95%, and a 10-year corporate bond yieids 9.75%. The market expects that

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A 5-year Treasury bond has a 4,35\% yleld. A 10-year Treasury bond ylelds 6,95\%, and a 10-year corporate bond yieids 9.75%. The market expects that inflation will average 3% over the next 10 years (1P10=3% ). Assume that there is no maturity risk premium (MRP m0 ) and that the annual real fisk-free rote, r, will remain constant over the next 10 years. (Hint: Remember that the defaul risk premium and the liquidity premium are zero for Treasury securities: DRP=LP=0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10 -year corporate bond described. The data has been collected in the Microsoft Excel Online fle below. Open the spreadsheet and perform the required analysis to answer the question below

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