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Now it's time for you to practice what you've learned. Suppose the real risk-free rate of interest is r=4% and it is expected to remain
Now it's time for you to practice what you've learned. Suppose the real risk-free rate of interest is r=4% and it is expected to remain constant over time. Inflation is expecter for the next 3 years and 4.50% per year for the next 5 years. The maturity risk premium is 0.1(t1)%, where t is number of years to maturity, a liquidity premium is 0.25%, and the default risk premium for a corporate bond is 1.70%. Complete the following table by calculating yields on Treasury and corporate bonds of various maturity
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