Question: he annual yield on a 4 - year corporate security is 6 . 8 7 5 percent, while the anual yeld oa 6 - year
he annual yield on a year corporate security is percent, while the anual yeld oa year corporate security is percent. Assurne that the real iskfree rate of riterest's expected to be constant over time at percent, the defauitrisk and iquidity premium on both securities is equal to percent. Also assume that the maturity risk premium foral securities can be estimated as MRPt where t is the number ofperiods unl maturity. for Year is percent, for Year is
Your analysis shows that the expected rate ofinflation for Year is percent. Further, the expected rate of infation for Year percent. Determine the anticipated the rate of infation for Year
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