Question: give acurate answer for upvote An analyst evaluating securities has obtained the following information. The real rate of interest is 3% and is expected to

 give acurate answer for upvote An analyst evaluating securities has obtained

give acurate answer for upvote

An analyst evaluating securities has obtained the following information. The real rate of interest is 3% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.9% next year, 3.9% the following year, 4.9% the third year, and 5.9% every year thereafter. The maturity risk premium is estimated to be 0.1(t1)%, where t= number of years to maturity. The liquidity premium on relevant 5 -year securities is 0.5% and the default risk premium on relevant 5 -year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. % b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. % C. What is the yield on a 5-year corporate bond? Round your answer to one decimal place. %

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