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Currently, a one - year Treasury bill is yielding 2 . 5 percent. Company F ' s three - year bond has a yield equal
Currently, a oneyear Treasury bill is yielding percent. Company Fs threeyear bond has a yield equal to percent, and its sevenyear bond has a yield equal to percent. Although none of the bonds has a liquidity
premium, any bond with a maturity equal to one year or longer has a maturity risk premium MRP Except for their terms to maturity, the characteristics of the bonds are the same.
a Compute the annual MRP associated with the bonds. Round your answer to one decimal place.
b Compute the default risk premium DRP associated with the bonds. Round your answer to one decimal place.
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