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help d. Based on the information about the corporate bond provided in part b, calculate yields and then construct a new yieid curve graph that
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d. Based on the information about the corporate bond provided in part b, calculate yields and then construct a new yieid curve graph that shows both the Treasury and the corporate bonds. Round your answers to two decimal places. Choose the correct graph, b. Suppose you are considering two possible investment opportunities: a 12 -year Treasury bond and a 7 -year, A-rated corporate bond. The current real risk-free rate is 4%, and inflation is expected to be 3% for the next 2 years, 4% for the folowing 4 years, and 5% thereater. The maturity risk premium is estimated by this formula: MAP =0.03(t1)%. The liquidity premium (LP) for the corporate bond is estimated to be 0.3%. You may determine the default risk premium (DR.P), given the company's bond rating, from the following table. Remember to subtract the bond's LP from the corporate spresd glven in the table to arrive at the bond's DRR. What yield would you predict for each of these two investments? Round your answers to three decimal piaces. 12.year Treasury yield: 7.year Corporate yield: d. Based on the information about the corporate bond provided in part b, calculate yields and then construct a new yieid curve graph that shows both the Treasury and the corporate bonds. Round your answers to two decimal places. Choose the correct graph, b. Suppose you are considering two possible investment opportunities: a 12 -year Treasury bond and a 7 -year, A-rated corporate bond. The current real risk-free rate is 4%, and inflation is expected to be 3% for the next 2 years, 4% for the folowing 4 years, and 5% thereater. The maturity risk premium is estimated by this formula: MAP =0.03(t1)%. The liquidity premium (LP) for the corporate bond is estimated to be 0.3%. You may determine the default risk premium (DR.P), given the company's bond rating, from the following table. Remember to subtract the bond's LP from the corporate spresd glven in the table to arrive at the bond's DRR. What yield would you predict for each of these two investments? Round your answers to three decimal piaces. 12.year Treasury yield: 7.year Corporate yield Step by Step Solution
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