About economic activity and moore corporation bonds

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Reference no: EM131183015

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 1.70 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real interest rate = 0.80% Default risk premium = 1.60% Liquidity risk premium = 0.90% Maturity risk premium = 2.20% a. What is the inflation premium? (Round your answer to 2 decimal places.) Expected IP % b. What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places.) Fair interest rate %

Reference no: EM131183015

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