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Hello! Please help me with this problem so I can proceed with my homework. You are given the following information: r* = 2% investors expect
Hello! Please help me with this problem so I can proceed with my homework.
You are given the following information: r* = 2% investors expect inflation to average 2% per year into the foreseeable future the MRP on 10 year bonds = 0.5% the LP on U.S. and Happy Inc. bonds = 0 the interest rate on a 10 year loan to Yubaba Inc. is 1.5 times the rate on a 10 year loan to the U.S. government
a) What is the interest rate on a 1 year and 10 year loan to the U.S. government? b) What is the DRP on a 10 year loan to Happy Inc.?
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