Problem 2-2 (LG 2-6) You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special Street Journal reports that 1-year T-bills are currently earning 0.40 percent. Your broker has determined the follo economic activity and Moore Corporation bonds: Real risk-free rate Default risk premium Liquidity risk premium Maturity risk premium = 0.33% = 1.55% = 0.90% = 1.05% a. What is the inflation premium? b. What is the fair interest rate on Moore Corporation 30-year bonds? (For all requirements, round your percentage answers to 2 decimal places. (e.g., 32.16)) a. Inflation premium b. Fair interest rate % %

You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special Street Journal reports that 1-year T-bills are currently earning 0.40 percent. Your broker has determined the foll economic activity and Moore Corporation bonds: a. What is the inflation premium? b. What is the fair interest rate on Moore Corporation 30-year bonds? (For all requirements, round your percentage answers to 2 decimal places. (e.g., 32.16))