Question: Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.65% yield. A 10-year Treasury bond yields 6.45%, and a 10-year corporate

Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond

Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.65% yield. A 10-year Treasury bond yields 6.45%, and a 10-year corporate bond yields 9.9%. The market expects that inflation will average 3.75% over the next 10 years (IP10= 3.75%). 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. (Hint: 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 required analysis to answer the question below. X Open spreadsheet What is the yield on this 5-year corporate bond? Round your answer to two decimal places. % Check My Work Reset Problem Next Back

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