Calculate the equity risk premium on the S&P 500 index level of 3.200 as at July 2020. State all assumptions made and the source of information. Attach your Excel worksheet workings in your submission. An investor is considering adding two new securities to his fixed income portfolio. The securities under consideration are as follows: 10-year A-rated corporate bond 10-year B-rated corporate bond The investor has gathered the following information: Real risk-free interest rate 1.2% Current inflation rate 2.2% Spread of 10-year over 1-year Treasury note 1.0% Long-term inflation expectation 2.6% 10-year A credit risk spread (over 10-year Treasuries) 0.65% 10-year B credit risk spread (over 10-year Treasuries) 0.90% The investor will make an equally weighted investment in the 10-year A-rated corporate bond and the 10-year B-rated corporate bond provided that the expected spread (risk premium) over the similar-term Treasury bond is at least 0.8 percent. Calculate the expected annual return for the 10-year A-rated corporate bond and the 10-year B-rated corporate bond respectively to the nearest 0.01 percent). Calculate the expected risk premium for an equally weighted fixed income bond portfolio (to the nearest 0.001 percent). (iii) Discuss the investor's decision and action. Calculate the equity risk premium on the S&P 500 index level of 3.200 as at July 2020. State all assumptions made and the source of information. Attach your Excel worksheet workings in your submission. An investor is considering adding two new securities to his fixed income portfolio. The securities under consideration are as follows: 10-year A-rated corporate bond 10-year B-rated corporate bond The investor has gathered the following information: Real risk-free interest rate 1.2% Current inflation rate 2.2% Spread of 10-year over 1-year Treasury note 1.0% Long-term inflation expectation 2.6% 10-year A credit risk spread (over 10-year Treasuries) 0.65% 10-year B credit risk spread (over 10-year Treasuries) 0.90% The investor will make an equally weighted investment in the 10-year A-rated corporate bond and the 10-year B-rated corporate bond provided that the expected spread (risk premium) over the similar-term Treasury bond is at least 0.8 percent. Calculate the expected annual return for the 10-year A-rated corporate bond and the 10-year B-rated corporate bond respectively to the nearest 0.01 percent). Calculate the expected risk premium for an equally weighted fixed income bond portfolio (to the nearest 0.001 percent). (iii) Discuss the investor's decision and action