Question: Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.9% yield. A 10-year Treasury bond yields 6.1%, and a 10-year

Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.9% yield. A 10-year Treasury bond yields 6.1%, and a 10-year corporate bond yields 8.2%. The market expects that inflation will average 3.15% over the next 10 years (IP10-3.15%). 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 Problem Interest rate premiums 5-year Treasury yield (T5) 10-year Treasury yield (T10) 10-year Corporate yield (C10) Inflation Premium over 10 years (IP 10) Maturity Risk Premium (MRP) DRP Treasury LP Treasury DRPC5+ LPcs = DRPC10 + LPC10 Real risk-free rate, r Inflation premium over 5 years (IPs) DRP 10+ LP 10 5-year Corporate yield (C5) 4.90% 6.10% 8.20% 3.15% 0.00% 0.00% 0.00% Formulas #N/A #N/A #N/A #N/A E

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