Real risk-free rate is constant at 2%. A particular long-term corporate security is quoted at 11.8%. Default risk premium is 4%. Maturity risk premium and Liquidity premium are both 1%. Inflation is expected to be 2%, 3%, 4% in for the next three years, and 5% constant for the years thereafter. The said long-term corporate security will mature after _____ years.
Real risk-free rate is constant at 2%. A particular long-term corporate security is quoted at 11.8%. Default risk premium is 4%. Maturity risk premium and Liquidity premium are both 1%. Inflation is expected to be 2%, 3%, 4% in for the next three years, and 5% constant for the years thereafter. The said long-term corporate security will mature after _____ years.
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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Real risk-free rate is constant at 2%. A particular long-term corporate security is quoted at 11.8%. Default risk premium is 4%. Maturity risk premium and Liquidity premium are both 1%. Inflation is expected to be 2%, 3%, 4% in for the next three years, and 5% constant for the years thereafter. The said long-term corporate security will mature after _____ years.
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