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Please don’t copy past anything from the internet or don’t use AI , and citation should be right   or any website like course hero or Wikipedia that a red

Please don’t copy past anything from the internet or don’t use AI , and citation should be right   or any website like course hero or Wikipedia that a red flag all work must be original!!! Write your own thoughts not the internet or someone else thoughts!!

  Required Text:

Finance: Applications and Theory, 6th Edition

ISBN10: 1264101589 | ISBN13: 9781264101580

By Marcia Cornett, Troy Adair, John Nofsinger 

 Class name:  Course Title: Corporate Finance FIN 5063

Week 6  assignment case study :

On page 230 of your text, complete and answer the case study on calculating interest rates.  please see attachment file for the book.

integrated mini-case Calculating Interest Rates From discussions with your broker, you have determined that the expected inflation premium is 1.35 percent next year, 1.50 percent in year 2, 1.75 percent in year 3, and 2.00 percent in year 4 and beyond. Further, you expect that real risk-free rates will be 3.20 percent next year, 3.30 percent in year 2, 3.75 percent in year 3, and 3.80 percent in year 4 and beyond. You are considering an investment in either five-year Treasury securities or five-year bonds issued by PeeWee Corporation. The bonds have no special covenants. Your broker has determined the following information about economic activity and PeeWee Corporation five-year bonds: 

Default risk premium = 2.10% 

Liquidity risk premium = 1.75 

Maturity risk premium = 0.75 

Further, the maturity risk premium on PeeWee bonds is 0.1875 percent per year starting in year 2. PeeWee’s default risk premium and liquidity risk premium do not change with bond maturity. 

a. What is the fair interest rate on five-year Treasury securities? 

b. What is the fair interest rate on PeeWee Corporation five-year bonds? 

c. Plot the five-year yield curve for the Treasury securities. 

d. Plot the five-year yield curve for the PeeWee Corporation bonds

This paper should be no less than 1500 words. 

Essential Activities: 

        1. Reading chapters 16-18 in in Textbook Finance: Applications and Theory will help in the completion of the assignment. 

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