You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports…

Published by admin at October 22, 2023

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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 1.65 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real risk-free rate = 0.65% Default risk premium = 1.55% Liquidity risk premium = 1.00% Maturity risk premium = 2.15%

a.What is the inflation premium?

b.What is the fair interest rate on Moore Corporation 30-year bonds?

You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports…

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