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help Assume that a 3-year Treasury security yleids 4.90%. Also assume that the real risk-free rate (y ) is 0.75, and infation is evpoctiod to
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Assume that a 3-year Treasury security yleids 4.90\%. Also assume that the real risk-free rate (y ) is 0.75, and infation is evpoctiod to be 2.25% annually for the noxt 3 yors, In addition to inflation, the nominal interest rate also includes a muturity risk premilum outeph that reflects intenest rate risk. What is the maturity risk premium for the 3 -year security? Pound your answer to two decimal slaces Your answer should be between 0.00 and 2.92 , rounded to 2 decimal places, with no specisl characters. Question 2 A Treasury bond that matures in 10 years has a yield of 4.75%. A 10 -year corporate bond has a yield of 6.65%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. rour answer should be between 0.74 and 2.52 , rounded to 2 decimal places, with no special characters. Lennar Corporationis one-year bond has a yeld equal to 5.35 . Suppose that the mafurity rikk promium 0MpPh for all bonds with five-yoar boods? Your answor should be betwoen 4.58 and 8.12 , rounded to 2 decimal places, with no special characters. Question 4 5 pts Sandino Corporation's 10 -year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nominal rate (MTM) of 7.12\%. Given an annual maturity risk premium (MRP) of (t1)0.10%, the bond's liquidity premium (LP) of 0.40% and default risk premium (DRP) of 2.70%, what is the risk-free (rRF) rate? Your answer should be between 1.80 and 3.58 , rounded to 2 decimal places, with no speclal characters Step by Step Solution
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