Demetrice Corporation has 5-year bonds. Inflation premium (IP) on a 5year bond is 1.00%. The real risk-free rate is r* = 2.80%, the default risk premium for Demetrice's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Demetrice's bonds is LP = 1.20%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) x 0.1%, where t = number of years to maturity. What is the yield on Demetrice Corporation's 6-year bonds?

Answer rating: 100% (QA)

To calculate the yield on Demetrice Corporations 6year bonds we ne... View the full answer