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A Treasury bond that matures in 10 years has a yield of 6.00%. A 10-year corporate bond has a yield of 7.50%. Assume that the

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A Treasury bond that matures in 10 years has a yield of 6.00%. A 10-year corporate bond has a yield of 7.50%. Assume that the liquidity premium on the corporate bond is 0.35%. What is the default risk premium on the corporate bond? Round your answer to two decimal places The real risk-free rate is 2.50%, and Inflation is expected to be 2.00% for the next 2 years. A 2-year Treasury security yields 9.25%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places % A 5-year Treasury bond has a 3.65% yield. A 10-year Treasury bond yields 6.65%, and a 10-year corporate bond yields 8.5%. The market expects that inflation will average 2.4% over the next 10 years (IP10 = 24%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, *, will remain constant over the next 10 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 default risk premium and tiquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond? Round your answer to two decimal places

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