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Question 2 1 pts Suppose the real risk-free rate is 3.50%, the average future inflation...

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Question 2 1 pts Suppose the real risk-free rate is 3.50%, the average future inflation rate is 2.50%, a maturity premium of 0.20% per year to maturity applies, i.e., MRP = 0.20%(t), where t is the number of years to maturity. Suppose also that a liquidity premium of 0.50% and a default risk premium of 1.30% applies to A-rated corporate bonds. What is the difference in the yields on a 5-year A-rated corporate bond and on a 10- year Treasury bond? Here we assume that the pure expectations theory is NOT valid, and disregard any cross-product terms, i.e., if averaging is required, use the arithmetic average. 0.93% 0.92% 0.66% 0.86% 0.80%

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