Maturity risk premium-default and liquidity premiums

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Drongo Corporation's 3-year bonds yield 5.22%. The real risk-free rate is 2.21%. The maturity risk premium is estimated to be 0.07%(t-1), where t is equal to the time to maturity. The default and liquidity premiums for Drongo's bonds total 1% and are believed to be the same for all bonds issued by the company. If the average inflation rate is expected to be 6.24% for years subsequent to 3 through year 11, what is the yield on a 11-year bond for Drongo?

Reference no: EM131047463

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