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Adiusted Problem 6-2 Determinants of Interest rates for Individual Securities: You are considering an Investment in 20-year bonds issued by ABC Corporation. The bonds have

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Adiusted Problem 6-2 Determinants of Interest rates for Individual Securities: You are considering an Investment in 20-year bonds issued by ABC Corporation. The bonds have no special covenants. The yleld on a one-year T-bill is currently 1.5%. Your broker has determined the following Information about economic activity and ABC Corporation bonds: Real risk-free rate 0.5% Default risk premium = 0.9% Liquidity risk premium = 0.4% Maturity risk premium = 1.8% What is the inflation premium? What is the fair interest rate on ABC Corporation's bonds

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