Given the interest rate component information below, determine the yield on a 5 year, A-rated bond. Show in percent to one decimal point without the percent sign. e.g. 3.1% would be 3.1 Real Rate 1.6% Inflation 4.5% 5 year Maturity Risk Premium 2.0% 10 year Maturity Risk Premium 3.0% AA Default Risk Premium 0.8% A Default Risk Premium 1.8%
Given the interest rate component information below, determine the yield on a 5 year, A-rated bond. Show in percent to one decimal point without the percent sign. e.g. 3.1% would be 3.1 Real Rate 1.6% Inflation 4.5% 5 year Maturity Risk Premium 2.0% 10 year Maturity Risk Premium 3.0% AA Default Risk Premium 0.8% A Default Risk Premium 1.8%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Given the interest rate component information below, determine the yield on a 5 year, A-rated bond.
Show in percent to one decimal point without the percent sign. e.g. 3.1% would be 3.1
| Real Rate | 1.6% |
| Inflation | 4.5% |
| 5 year Maturity Risk Premium | 2.0% |
| 10 year Maturity Risk Premium | 3.0% |
| AA Default Risk Premium | 0.8% |
| A Default Risk Premium | 1.8% |
1 year Treasury rates are 4%, while 2 year Treasury rates are 6%. What is the expected 1 year Treasury rate one year from today?
answer format: show your answer to one decimal places. If your answer is, for example, 3.252%, then input 3.3 without the percent sign.
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