Calculate yield on a municipal and corporate bond with ten

Reference no: EM13618261

Calculate yield on a municipal and corporate bond with ten years to maturity. Inflation premium is expected at the rate of 0.02% per year. Municipal bonds trade infrequently and require a premium of 1.0% and the corporate bonds yield additional 0.5%. Due to the current financial crisis, MUNIs must pay 0.5% compensation for the possibility of bankruptcy whereas a corporate bond pays 2.5% for the same risk. Total yield on ten year treasury bonds is 2.3%?

Reference no: EM13618261

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