Question: A 5-year Treasury bond has a 4% yield. A 10-year Treasury bond yields , and 10-year corporate bond yields 9.35% . The market expects that

A 5-year Treasury bond has a 4% yield. A 10-year Treasury bond yields , and 10-year corporate bond yields 9.35% . The market expects that inflation will average 3.9% over the next 10 years (IP 10 =3.9%) Assume that there is no maturity risk premium (MRP = 0) 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: DRP - LP -0.) A -year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate hond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below .

Interest rate premiums 1 Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4% yield. A 10-year Treasury bond yields 6.95%, and a 10-year corporate bond yields 9.35%. The market expects that inflation will average 3.9% over the next 10 years (IP 10 - 3.9%). Assume that there is no maturity risk premium (MRP - 0) 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: DRD - LP0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. x Open spreadsheet What is the vield on this 5-year corporate bond Round your answer to two decimal place Check My Work

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