An investor gathers the following data on three newly-issued bonds: 1-year government bond, 3.0% yield 1-year ABC corporate bond, 4.2% yield 10-year government bond, 3.8% yield If investors require a 0.5% liquidity premium for corporate bonds, what are the components of the required return on a 10-year ABC bond?

Answer rating: 100% (QA)

Step 1 The yield of the interest rate is equal to the sum of the government bond yield of the same m... View the full answer