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I just need the answers for b. and c. Please show your work. Thanks. Hide Feedback Partially Correct Quantitative Problem: An analyst evaluating securities has
I just need the answers for b. and c. Please show your work. Thanks.
Hide Feedback Partially Correct Quantitative Problem: An analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.4% next year, 3.4% the following year, 4.4% the third year, and 5.4% every year thereafter. The maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. 5.3 % Show All Feedback b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. % Show All Feedback c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place. % Show All Feedback XStep by Step Solution
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