Drongo corporations 4-year bonds yield 507 the real, Ask an Expert

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Drongo Corporation's 4-year bonds yield 5.07%. The real risk-free rate is 2.71%. The maturity risk premium is estimated to be 0.05%(t-1), where t is equal to the time to maturity. The default and liquidity premiums for Drongo's bonds total 1.24% and are believed to be the same for all bonds issued by the company. If the average inflation rate is expected to be 6.94% for years subsequent to 4 through year 8, what is the yield on a 8-year bond for Drongo?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91771900

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