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Please 1 and 2 showll all work 1. If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium
Please 1 and 2 showll all work
1. If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
2. Suppose the real risk-free rate is 4.50% and the future rate of inflation is expected to be constant at 3.25%. What rate of return would you expect on a 1-year Treasury security?
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