Question: Questions A and B FIN 330 Fall 2018 lestructor: Jiahao Gu Calculation Questions (please show detailed steps)s 4. (20 points) You are considering an investment

Questions A and B Questions A and B FIN 330 Fall 2018 lestructor: Jiahao Gu

FIN 330 Fall 2018 lestructor: Jiahao Gu Calculation Questions (please show detailed steps)s 4. (20 points) You are considering an investment in 30-year honds issued by Moore Corporation The bonds have no special covenants. The Wall Street Journal reports that one-year T currently earning 3.25% Your broker has determined the following i activity and Moore Corporation bonds: bills are information about economic Real risk-free rate: 2.25% Default risk premium: 1.15% Liquidity risk premium: 0.50% Maturity risk premium: 1.75% A. What is the inflation premium? B. what is the fair interest rate on Moore Corporation 30-year bonds? Page 3 of 5

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