multiple_choice_question 29143999 You are considering an investment in 30-year b

Question

multiple_choice_question 29143999 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 3.55%. Your broker has determined the following information about economic activity and Moore Corporation bonds:<br> <br>Real interest rate = 2.75%<br>Default risk premium = 1.05%<br>Liquidity risk premium = 0.50%<br>Maturity risk premium = 1.85%<br>What is the inflation premium? 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 3.55%. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real interest rate = 2.75%
Default risk premium = 1.05%
Liquidity risk premium = 0.50%
Maturity risk premium = 1.85%
What is the inflation premium? multiple_choice_question 29143999 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 3.55%. Your broker has determined the following information about economic activity and Moore Corporation bonds:<br> <br>Real interest rate = 2.75%<br>Default risk premium = 1.05%<br>Liquidity risk premium = 0.50%<br>Maturity risk premium = 1.85%<br>What is the inflation premium? 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 3.55%. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real interest rate = 2.75%
Default risk premium = 1.05%
Liquidity risk premium = 0.50%
Maturity risk premium = 1.85%
What is the inflation premium? 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 3.55%. Your broker has determined the following information about economic activity and Moore Corporation bonds:<br> <br>Real interest rate = 2.75%<br>Default risk premium = 1.05%<br>Liquidity risk premium = 0.50%<br>Maturity risk premium = 1.85%<br>What is the inflation premium? 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 3.55%. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real interest rate = 2.75%
Default risk premium = 1.05%
Liquidity risk premium = 0.50%
Maturity risk premium = 1.85%
What is the inflation premium?

Explanation / Answer

inflation premium= 3.55-2.75 = .8%

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