Using the following information, determine the maturity riskpremium on 10 year bonds:Rate%inflation...

Using the following information, determine the maturity risk premium on 10 year bonds:

Rate	%
inflation	1.59
T-bill	5.00
10y T-Bond	6.00
10y AAA Corporate	6.35
10y AA Corporate	7.71

Expert Solution

The 10-Year T-bond rate is 6% and the 1 Year T-Bond rate is 5%.

So Maturity Risk Premium = The 10-Year T-bond rate - 1 Year T-Bond rate

= 6% - 5%

= 1%

jeff jeffy answered 3 years ago

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