What is the real risk-free rate of return on apple bonds

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Reference no: EM131339654

You are considering an investment in 30-year bonds issued by Apple. One-year T-bills are currently earning 2.2% and inflation has been 1.5%. Bloomberg Finance shows the current information for Apple bonds:

Default risk premium = 1.15%

Liquidity risk premium = 0.50%

Maturity risk premium = 1.75%

a. What is the real risk-free rate of return on Apple bonds?

b. What is the fair interest rate on Apple 30-Year bonds?

Reference no: EM131339654

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