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Problem 4 (10 points) You are considering an investment in 10-year bonds issued by Apple Inc. The bonds have no special covenants. The Wall Street

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Problem 4 (10 points) You are considering an investment in 10-year bonds issued by Apple Inc. The bonds have no special covenants. The Wall Street Journal reports that 10 -year T-bills are currently earning 2.25%. Your broker has determined the following information about economic activity: Real interest rate =1.00% Default risk premium =1.15% Liquidity risk premium =0.50% Maturity risk premium =0.75% What is the fair interest rate on Apple Inc.10-year bonds

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