1-Draw a Time Line

2-Write Step by Step process in your Fin Calculator

3-Write the answer

-6-17 A 5-year Treasury bond has a 5.2\% yield. A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10 years. Assume that there is no maturity risk premium and that the annual real risk-free rate, , will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: .) 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 5vear coroorate bond? -6-17 A 5-year Treasury bond has a 5.2\% yield. A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10 years. Assume that there is no maturity risk premium and that the annual real risk-free rate, , will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: .) 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 5vear coroorate bond