What is the fair interest rate on moore corporation bonds

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Reference no: EM131977905

You are considering an investment in 20-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that one-year T-bills are currently earning 0.50 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate = 0.47% Default risk premium = 1.05% Liquidity risk premium = 0.60% Maturity risk premium = 0.85%

a. What is the inflation premium? (Round your answer to 2 decimal places. (e.g., 32.16))

Inflation premium %

b. What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places. (e.g., 32.16))

Fair interest rate %

Reference no: EM131977905

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