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    ceetwain Posts: 3, Reputation: 1
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    Mar 3, 2013, 03:51 PM
    interest rate
    Calculate a table of interest rates for 5 years based on the following information:

    • The pure interest rate is 2%.
    • Inflation expectations for year 1 = 3%, year 2 =4%, years 3-5 =5%.
    •The default risk is .1% for year one and increases by .1% over each year.
    •Liquidity premium is 0 for year 1 and increases by .2% each year.
    •Maturity risk premium is 0 for years 1 and 2 and .3% for years 3-5

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