Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help. thank you! # Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.55% yield. A 10-year Treasury bond
please help. thank you!
# Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.55% yield. A 10-year Treasury bond yields 6,6%, and a 10-year corporate bond yields 8.1%. The market expects that inflation will average 2.55% over the next 10 years (IP30 -2.55%). Assume that there is no maturity risk premium (MRP - 0) and that the annual real risk-free rate, r, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are more for Treasury securities: ORP - LP -0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online Nite below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet What is the yield on this 5 year corporate bond? Round your answer to two decimal places. Check My Work Reset Problem Excel template - Saved O Search (A File Home Insert Draw Page Layout Formulas Data Du Arial v 10 W BY A B12 fx B C D 4.55% 6.60% 8.10% A Interest rate premiums 2 35-year Treasury yield (TS) 4 10-year Treasury yield (T10) 5 10-year Corporate yield (C10) 6 Inflation Premium over 10 years (IP10) 7 Maturity Risk Premium (MRP) 8 DRP Treasury 9 LP Treasury 10 DRPcs + LPcs = DRPC10 + LPC10 11 12 Real risk-free rate, 13 14 Inflation premium over 5 years (IPS) 15 2.55% 0.00% 0.00% 0.00% Formulas #N/A #N/A 16 DRP 10 + LP 10 #N/A 17 18 5-year Corporate yield (Cs) 19 20 21 #N/A Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started