Business, 08.07.2021 16:00 tilacohen

You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 2.15 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate = 0.75%
Default risk premium = 2.05%
Liquidity risk premium = 1.40%
Maturity risk premium = 2.65%

Required:
a. What is the inflation premium?
b. What is the fair interest rate on Moore Corporation 30-year bonds?

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You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no sp...

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