1 maturity risk premiumthe real risk-free rate is 35 and, Ask an Expert

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1. Maturity Risk Premium

The real risk-free rate is 3.5%, and inflation is expected to be 2.25% for the next 2 years. A 2-year Treasury security yields 9%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places. %

2. Default Risk Premium

A Treasury bond that matures in 10 years has a yield of 5%. A 10-year corporate bond has a yield of 9.5%. Assume that the liquidity premium on the corporate bond is 0.4%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92850258

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