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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 Determinants of Interest Rates for Individual Securities LG
You are considering an investment in year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that year Tbills are currently earning percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:
Real riskfree rate
Default risk premium
Liquidity risk premium
Maturity risk premium
What is the inflation premium? Round your answer to decimal places.
What is the fair interest rate on Moore Corporation year bonds? Round your answer to decimal places.
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