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Crockett Corporation's year bonda yield 6,60%, und s-ar T-bonds yield 4.0. The real ristrerater, the default risk premium Crockett's bonds is DRP-1.20% verro for T-bonds,

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Crockett Corporation's year bonda yield 6,60%, und s-ar T-bonds yield 4.0. The real ristrerater, the default risk premium Crockett's bonds is DRP-1.20% verro for T-bonds, the liquidity premium on Crockett's boods is LI.00 Vrsta moto for T.bens, and the maturity risk premium for all batuts is found with the formula MRP (t-1)-0.1% wheret - number of years to maturity. Whit inflation premium (IT) la brilltintos year bond yields? 1.76 . 1.80 130 Od: 2.205 O. 1.2004 Suppose the real risk-free rate is 4.25%, the average future inflation rate is 3.25%, a maturity premium of 6.15% per year to maturity applies, ie, MRP 0.15%(t), where t is the number of years to maturity, Suppose also that a liquidity premium of 0.50% and a default risk premium of 1.50% applies to A-rated corporate bonds. What is the difference in the yields on a 5-year A-rated corporate bond and on a 10-year Treasury bond? Here we assume that the pure expectations theory is NOT valid, and disregard any cross-product terms, ie, if averaging is required, use the arithmetic average 0 261 pp O. . 1.75 pp c.2.75 pp. d. 125 p.p. e. 2.00 pp

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