Drongo corporations 2-year bonds yield 681 the real, Ask an Expert

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Drongo Corporation's 2-year bonds yield 6.81%. The real risk-free rate is 2.7%. The maturity risk premium is estimated to be 0.09%(t-1), where t is equal to the time to maturity. The default and liquidity premiums for Drongo's bonds total 1.27% and are believed to be the same for all bonds issued by the company. If the average inflation rate is expected to be 5.51% for years subsequent to 2 through year 9, what is the yield on a 9-year bond for Drongo?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91768559

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