QUESTION 12 Kern Corporation's 5-year bonds yield 7.70% and 5 year T-bonds yield 4.50%. The...
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QUESTION 12 Kern Corporation's 5-year bonds yield 7.70% and 5 year T-bonds yield 4.50%. The real risk-free rate is r-2,5, the default risk premium for Kern's bonds is DRP 1.90% versus rere for T-bonds, the liquidity premium on Kern's bonds is LP-1-3, and the maturity riak premium for all bonde is found with the formula MRP (t-1)-0.1%, where t-number of years to maturity. What is the inflation premium (IP) on all 5 year bonds a. 1.36 D. 1.789 O 1.8296 1499 1.50
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