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Drongo Corporation's 3-year bonds yield 5.63%. The real risk-free rate is 2.67%. The maturity risk premium is estimated to be 0.13%(t-1), where t is equal
Drongo Corporation's 3-year bonds yield 5.63%. The real risk-free rate is 2.67%. The maturity risk premium is estimated to be 0.13%(t-1), where t is equal to the time to maturity. The default and liquidity premiums for Drongo's bonds total 1.37% and are believed to be the same for all bonds issued by the company. If the average inflation rate is expected to be 5.82% for years subsequent to 3 through year 8, what is the yield on a 8-year bond for Drongo?
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