Calculate a table of interest rates based on the following

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Calculate a table of interest rates based on the following information:

  • The pure interest rate is 1.6%
  •  Inflation expectations for year 1 = 3%, year 2 =3.5%, years 3-5 =5%
  •  The default risk is .1% for year one and increases by .2% over each year
  •   Liquidity premium is 0 for year 1 and increases by .2% each year
  •   Maturity risk premium is 0 for years 1 and 2 and .2% for years 3-5

Reference no: EM13392867

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