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You observe a real interest rate of 1.1%, and measure the liquidity premium at 0.40% and the default premium at 0.60%. You also estimate the
You observe a real interest rate of 1.1%, and measure the liquidity premium at 0.40% and the default premium at 0.60%. You also estimate the maturity risk premium to be equal to 125*(t 1)%. Finally, you estimate future inflation rates to be 7%, 5%, 3%, for Years 1 through 3, respectively, and then remain steady at 2% long-term. Estimate the yield a 10-year corporate bond using the information above. (include THREE decimal places, but do NOT include the "%" sign. Example 12.345% = 12.345)
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