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Suppose the real risk-free rate is 3.25%, the average fuwe inflation rate is 4.35% and a maturity risk premium of 0.07 per year to maturity

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Suppose the real risk-free rate is 3.25%, the average fuwe inflation rate is 4.35% and a maturity risk premium of 0.07 per year to maturity applies to both corporate and T-bondi.it MRP -0.07%), where is the number of years to maturity. Suppose also that a liquidity prem of 0.50% and a default risk premium of 2.50% apply to A rated corporate bonds later to T-bonds. How much higher would the rate of retum be on a 10-year A-rated corporate bond than a year Treasury bond? Here we assume that the per expectation theory a NOT valid Diure and comes produet tema, ie, if averaging is required me the withmetic werage 335 3.05

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