Question
You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year
| You are considering an investment in 30-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 1.50 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: |
| Real risk-free rate = 0.50% |
| Default risk premium = 1.40% |
| Liquidity risk premium = 1.00% |
| Maturity risk premium = 2.00% |
| a. | What is the inflation premium? (Round your answer to 2 decimal places.) |
| Expected IP | % |
| b. | What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places.) |
| Fair interest rate | % |
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Sales Audit The Sales Managers Playbook For Getting Control Of The Selling Cycle And Improving Results
Authors: Corey Hutchison
1st Edition
0595421342, 978-0595421343
