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A company's 5 - year bonds are yielding 8 % per year. Treasury bonds with the same maturity are yielding 3 . 9 % per

A company's 5-year bonds are yielding 8% per year. Treasury bonds with the same maturity
are yielding 3.9% per year, and the real risk-free rate (r**) is 2.25%. The average inflation
premium is 1.25%, and the maturity risk premium is estimated to be 0.1(t-1)%, where t
= number of years to maturity. If the liquidity premium is 0.9%, what is the default risk
premium on the corporate bonds? Round your answer to two decimal places.
@%
The real risk-free rate is 2.85%. Inflation is expected to be 3.85% this year, 4.35% next year,
and 2.6% thereafter. The maturity risk premium is estimated to be 0.05(t-1)%, where t=
number of years to maturity. What is the yield on a 7-year Treasury note? Do not round
intermediate calculations. Round your answer to two decimal places.
@%
Your client is 34 years old. She wants to begin saving for retirement, with the first payment to
come one year from now. She can save $5,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 10% in the future.
Q1:If she follows your advice, how much money will she have at 65? Do not round intermediate
calculations. Round your answer to the nearest cent.
Q2: How much will she have at 70? Do not round intermediate calculations. Round your answer to the
nearest cent.
Q3: She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her
investments continue to earn the same rate, how much will she be able to withdraw at the end of each
year after retirement at each retirement age? Do not round intermediate calculations. Round your
answers to the nearest cent
Annual withdrawals if she retires at 65 :
Annual withdrawals if she retires at 70 :PLEASE ANSWER ALL QUESTIONS!
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