Question: Excel Online Structured Activity: Interest rate premiums (Image isn't very clear, so here's the text version) Excel Online Structured Activity: Interest rate premiums A 5-year

Excel Online Structured Activity: Interest rate premiums (Image isn't very clear,

Excel Online Structured Activity: Interest rate premiums

(Image isn't very clear, so here's the text version)

Excel Online Structured Activity: Interest rate premiums

A 5-year Treasury bond has a 3.25% yield. A 10-year Treasury bond yields 6.1%, and a 10-year corporate bond yields 8.15%. 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.

What is the yield on this 5-year corporate bond? Round your answer to two decimal places.

so here's the text version) Excel Online Structured Activity: Interest rate premiums

Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 3.25% leld. A 10-year Treasury bond y elds 1% and a 10-year corporate bond yields 8.15%, The market expects that n ation 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, , wil 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 defaut isk 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 bellow What is the yield on this 5-year corparate bond? Round your answer to two decimal places Check My Wark Reset Problem Interest rate premiums 3 5-year Treasury yield (Ts) 3.25% 6.10% 8.15% 10-year Treasury yield (T1 5 10-year Corporate yield (C10) 6 Inflation Premium over 10 years (IP10) 7 Maturity Risk Premium (MRP) 8 DRP Treasu 9 LP Treasury 376% 0.00% 0.00% 0.00% Formulas 2 Real risk-free rate, r* 4 Inflation premium over 5 years (IP5) 6 DRP10+ LP10 7 8 5-year Corporate yield (C5)

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