Excel template - Saved Simplified Ribbon File Home Insert Formulas Data Review View Help Tell me what you want to do Editing Comments [v govor: Arial 10 B A ab Percentage 0 00 . 0 B12 fo B D E E F G H 1 K L M N O P 4.05% 6.25% 8.35% 2.55% 0.00% 0.00% 0.00% Formulas #N/A #N/A #N/A A 1 Interest rate premiums 2 3 5-year Treasury yield (TS) 4. 10-year Treasury yield (10) 5 10-year Corporate yield (Co) 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 Inflation premium over 5 years (IP) 15 16 DRPD + LP DRP 10 17 18 5-year Corporate yield (Cs) 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 #N/A 27 = Sheet1 + Calculation Mode: Automatic Workbook Statistics Give Feedback to Microsoft - 100% + 1 Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.05% yield. A 10-year Treasury bond yields 6.25%, and a 10-year corporate bond yields 8.35%. The market expects that inflation will average 2.55% over the next 10 years (IP20 = 2.55%). 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