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An analyst evaluating securities has obtained the following information. The reat rate of interest is 3% and is expected to remain constant for the next
An analyst evaluating securities has obtained the following information. The reat rate of interest is 3% and is expected to remain constant for the next is years Infiation is expected to be 2.8% next year, 3.8% the following year, 4.8% the third year, and 5.8% every year thereafter. The maturity risk premium is estimated to be 0.1(t1)%, where t= number of years to maturity. The liquidity premlum on relevant 5 -year securities is 0.5% and the default risk premium on relevant 5 -year securities is 1%. a. What is the vield on a 1-year T-bil? Round your answer to one decimal nlace. b. What is the yield on a Scyear T-bond? Aound your answer to one decimal place. c. What is the yield on a 5-year corporate bond?-Round your answer to one decimal place
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