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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 3.25 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real risk-free rate = 2.25 %
Default risk premium = 1.15 %
Liquidity risk premium = 0.50 %
Maturity risk premium = 1.75 %

a. What is the inflation premium? b. What is the fair interest rate on Moore Corporation 30-year bonds?

a.Inflation premium%

b.Fair interest rate%

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