Question: al | hamunit Umrarthy CH 3 Assignmentalment, Cash Flow, and taxes Cage INDTAP Search this course sy. Interest rate premiums Video Excel Online Structured Activity:

al | hamunit Umrarthy CH 3 Assignmentalment, Cash Flow, and taxes Cage INDTAP Search this course sy. Interest rate premiums Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.65% yield. A 10-year Treasury band yields 6.25%, and a 10-year corporate bond yields 9.5%. The market expects that inflation will average 3.75% over the next 10 years (IPA-3.754). Assume that there is no maturity risk premium (MRP - 0) and that the annual real risk-free rate, r, will remain constant over the next 10 years. (Hinti Remember that the default risk premium and the liquidity premium are zero for Treasury securities DRP - LP -0.) 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 requred analysis to answer the question below. Open spreadsheet What is the yield on this 5-year corporate bond? Round your answer to two decimal places https:/g.conga E-Portal | Cumberland University Ch 03: Assignment - Finance Excel template - Saved e sea File Home Insert Formulas Data Review View Help y Arial V10 B HA B12 c D 4.65% 6.25% un 9.50% DO A 1 Interest rate premiums 2 3 5-year Treasury yield (Ts) 4 10-year Treasury yield (T10) 5 10-year Corporate yield (C10) 6 Inflation Premium over 10 years (IP10) 7 Maturity Risk Premium (MRP) 8 DRP Treasury 9 LP Treasury 10 DRPcs + LPcs = DRPC10 + LPC10 11 12 Real risk-free rate, 13 14 Inflation premium over 5 years (IPS) 15 16 DRP 10 + LP 10 17 18 5-year Corporate yield (C) 3.75% 0.00% 0.00% 0.00% Formulas #N/A #N/A #N/A #N/A 19 20 21 22 23 24 25 26 27 20

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