Question
What is the yield for each of the two investments given the following information? (the 12 year treasury, and the 7 year corporate bond) Real
What is the yield for each of the two investments given the following information? (the 12 year treasury, and the 7 year corporate bond)
Real risk-free rate: 3%...
Expected Inflation 2% (for the next 2 years)... Expected inflation 3% (for the following 4 years)... Expected inflation 4% (for all time after the 6 year period)...
Maturity risk premium: 0.03%...
Liquidity premium: 0.2%...
AA rated bond Default risk premium + Liquidity premium: 0.48% (for corporate bonds)
a) Find the yield for the 12-year Treasury and calculate it using the xcel formula
b) Find the yield for the 7-year corporate AA rated bond and calculate it using the xcel formula
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