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 2.10 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate = 0.70% Default risk premium = 2.00% Liquidity risk premium = 1.40% Maturity risk premium = 2.60% a. What is the inflation premium? b) What is the fair interest rate on Moore Corporation 30-year bonds?
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Handbook Of Global Financial Markets
Authors: Sabri Boubaker, Duc Khuong Nguyen
1st Edition
9813236647, 978-9813236646
