Question: Use the following data to answer questions 8 - 10 r* = 9% IP (1 year bonds) = 2.45% IP (3 year bonds) = 3.20%
Use the following data to answer questions 8 - 10 r* = 9% IP (1 year bonds) = 2.45% IP (3 year bonds) = 3.20% IP (5 year bonds) = 3.65% DRP (AAA corporate bonds) = 0.43% DRP (AA+ corporate bonds) = 0.46% LP (AAA corporate bonds) = 0.15% LP (AA+ corporate bonds) = 0.17% MRP = 0.1% x (t-1) where t is the number of years to maturity Calculate the interest rate for a 2 year AAA corporate bond. Calculate the interest rate for a 5 year AA+ corporate bond. Calculate the interest rate for a 1 year Treasury security
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