Question
You have the following information gathered about a bond: Yield-to-Maturity = 7.4% Average annualized expected inflation rate over the life of the bond = 0.6%
You have the following information gathered about a bond:
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Yield-to-Maturity = 7.4%
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Average annualized expected inflation rate over the life of the bond = 0.6%
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Default Risk Premium = 0.7%
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Liquidity Risk Premium = 0.2%
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Maturity Risk Premium = 0.3%
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Special Characteristics Premium = -0.1%
Given this, the real rate of interest (k*) associated with this bond is ____%.
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77861671, 978-0077861674
