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MC Qu. 3 Determinants of Interest Rate for Individual Securities You are Determinants of Interest Rate for Individual Securities You are considering an Investment in
MC Qu. 3 Determinants of Interest Rate for Individual Securities You are Determinants of Interest Rate for Individual Securities You are considering an Investment in 30 year bonds issued by a corporation. The bonds have no special covenants The Wa Street Joumal reports that 1-year T-bills are cumently earning 360 percent Your broker has determined the following information about economic activity and the corporation bonds Real interest rate 2.80% Default risk premium a 2.35% Liquidity risk premlum-100% Maturity risk premium-230% Whet is the infletion premium? Whet is the fair interest rate on the corporation's 30 year bonds? 80% and 905% respectively O 80% and 825%, respectively 80% and 18rs, respectively 360% and 1185%, respectively
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