1. Business
2. Finance
3. Bond Valuation
4. 140496

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Interest rate premiums A 5-year Treasury bond has a 5.2 percent yield. A 10-year Treasury
bond yields 6.4 percent, and a 10-year corporate bond yields 8.4 percent. The market
expects that inflation will average 2.5 percent over the next 10 years (IP10  2.5%).
Assume that there is no maturity risk premium (MRP  0), and that the annual real riskfree
rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default
risk premium and the liquidity premium are zero for Treasury securities: DRP  LP  0.)
A 5-year corporate bond has the same default risk premium and liquidity premium as the
10-year corporate bond described above. What is the yield on this 5-year corporate bond?

I'm able to get the answer using a bond calculator, but I do not understand how to complete this and show all of my steps. I need help showing my steps.