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ty: Interest rate premiums Video Search this course Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.8% yield. A
ty: Interest rate premiums Video Search this course Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond yields 6.55%, and a 10-year corporate bond yields 9.45%. The market expects that inflation will average 2.4% over the next 10 years (IP2.4%). Assume that there is no maturity risk premium (MRP-0) and that the annual real risk-free rate, r", will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP-LP-0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet What is the yield on this 5-year corporate bond? Round your answer to two decimal places. %
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