The maturity risk premium is estimated to be 02 x t where


You own a Rodgers Inc corporate bond that matures in 5 years. The real risk-free rate is 1%. Inflation is expected to be 1%, 2%, and 3% during the next three years and then 4% thereafter. The maturity risk premium is estimated to be 0.2% x t , where t is equal to the maturity of the bond. The liquidity premium is 0.3% for Rodgers Inc bonds. The default risk premium is 3.2% for Rodgers Inc bonds. What is the interest rate of the bond?

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Basic Computer Science: The maturity risk premium is estimated to be 02 x t where
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