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Problem 6 - 2 Determinants of Interest Rates for Individual Securities ( LG 6 - 6 ) You are considering an investment in 3 0

Problem 6-2 Determinants of Interest Rates for Individual Securities (LG6-6)
You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 1.60 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:
Real risk-free rate =0.40%
Default risk premium =1.50%
Liquidity risk premium =1.20%
Maturity risk premium =2.10%
What is the inflation premium? (Round your answer to 2 decimal places.)
What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places.)

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