Question: 16. Problem 6.17 (Interest Rate Premiums) look A 5 year Treasury bond has a 4.9% yield. A 10 year Treasury bond yields 6.95, and a

16. Problem 6.17 (Interest Rate Premiums) look A 5 year Treasury bond has a 4.9% yield. A 10 year Treasury bond yields 6.95, and a 10 year corporate bond yields 8.8%. The market expects that inflation will average 2.4% over the next 10 years (IPD - 2.4%). Assume that there is no maturity risk premium (MRD-0) and that the annual realisererate, r" will remain constant over the next 10 years. Hint: Remember that the default risk premium and the qudity premium are reo for Treasury securities: DRP-UP -0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10 year corporate bond described. What is the yield on this year corporate bond Round your answer to two decimal places Grade it Now Save & Continue

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