Question
For government bonds, the one-year interest rate for the coming year is 1%, and the one-year interest rates for those the next two years are
For government bonds, the one-year interest rate for the coming year is 1%, and the one-year interest rates for those the next two years are expected to be 1.25% and 1.25% respectively.
For a company that issues bonds, the risk premium for credit risk applies is 0.15% above the interest rate on the government bond with the same maturity, and that the liquidity risk premium is 0.10%, 0.12% and 0.17% respectively for one, two and three years. How big is the one-, two- and three-year interest that the company receives on them corporate bonds it issues?
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