(Answered) You are given the following informationr 15 investors

Finance

You are given the following information:

r* = 1.5%
Investors expect inflation to average 3% per year into the foreseeable future
The MRP on 200 year bonds = 2%
The LP on U.S. and Yubaba Inc. bonds = 0
The interest rate on a 20 year loan to Yubaba Inc. is 1.25 times the rate on a 20 year loan to the U.S. government.

What is the DRP on a 20 year loan to Yubaba Inc.

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