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You are considering an investment in 20-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year

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You are considering an investment in 20-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 0.50 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate = 0.45% Default risk premium = 1.05% Liquidity risk premium = 0.804 Maturity risk premium = 0.75% a. What is the inflation premium? b. What is the fair interest rate on Moore Corporation 20-year bonds

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