What is the nominal interest rate on four year bond

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Reference no: EM132032762

Suppose the real risk-free rate of interest is 3%. Inflation is expected to be 1% for 2 years and then 3% thereafter. The maturity risk premium is 0.1%(t), where t is the number of years until maturity. The default risk premium is 3%. The liquidity premium is 0.5%. What is the nominal interest rate on a 4 year bond? Use Excel.

Reference no: EM132032762

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