Question
Determinants of interest rate for individual securities you are considering an investment in 30-year bonds issued by a corporation. the bonds have no special covenants.
Determinants of interest rate for individual securities you are considering an investment in 30-year bonds issued by a corporation. the bonds have no special covenants. the wall street journal reports that 1-year t-bills are currently earning 3.90 percent. your broker has determined the following information about economic activity and the corporation bonds: Real interest rate=2.70% Default risk premium = 2.15% Liquidity risk premium=.90% Maturity risk premium = 1.90% what is the inflation premium? what is the fair interest rate on the corporation 30-year bonds?
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