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The real risk free rate,r, is 2.65%. Inflation is expected to average 3.45% a year for the next 4 years, after which time inflation is

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The real risk free rate,r, is 2.65%. Inflation is expected to average 3.45% a year for the next 4 years, after which time inflation is expected to average 3% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 8.9%, which includes a liquidity premium of 0.65%. What is its default risk premium? Do not round Intermediate calculations. Round your answer to two decimal places. An Investor in Treasury securities expects inflation to be 2.05% in Year 1.3.5% in Year 2, and 3.95% each year thereafter. Assume that the real risk-free rate is 1.8% and that this rate will remain constant. Three year Treasury securities yield 6.80%, while 5-year Treasury securities yield 7.60%. What is the difference in the maturity risk premiums (MRP) on the two securities that is what is MRPS - MRP? Do not round intermediate calculations. Round your answer to two decimal places A company's 5-year bonds are yielding 9.55% per year. Treasury bonds with the same maturity are yielding 6.25% per year, and the real risk-free rate (r") 2.20%. The average inflation premium is 3.65%, and the maturity risk premium is estimated to be 0.1 x (t-1)%, where t = number of years to maturity. In the liquidity premium is 0.8%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places The real risk-free rate is 3.25%, and inflation is expected to be 3.75% for the next 2 years. A 2-year Treasury security yields 8.00% What is the maturity risk premium for the 2-year security? Round your answer to two decimal places A Treasury bond that matures in 10 years has a yield of 5.75%. A 10-year corporate bond has a yield of 9.75%. Assume that the liquidity premium on the corporate bond is 0.50%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. % You read in The Wall Street Journal that 30-day T-bills are currently yielding 6%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums: Inflation premium 2.50% Liquidity premium = 1.1% Maturity risk premium = 2.15% Default risk premium = 2.00% On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places

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