Calculate the inflation premium, IP = Data = Review View 1.25% 0.75% 1.15% 0.50% 1.75% 0.00% Automate 5.40% ab Wrap Text v Tell me Merge & Center v D B C 1 Problem 6-2: Determinants of Interest Rates for Individual Securities 2 You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 1.25 percent. 3 4 Your broker has determined the information given below about economic activity and Moore Corp. bonds. a. Calculate the inflation premium. 5 6 b. Calculate the fair interest rate on Moore Corporation 30-year bonds. 7 LG6-4: Analyze specific factors that influence interest rates. 8 9 Assumptions: 10 1-year T-bills rate: 11 Real interest rate, RFR: 12 Default risk premium, DRP(j): 13 Liquidity risk premium, LRP(j): 14 Maturity risk premium, MP(j): 15 Special covenant premium, SCP(j): 16 E General $ % 9 F G 000 Cell Conditional Format Formatting as Table Styles H I J