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Lennar Corporations one-year bond has a yield equal to 6.1%. Suppose that the maturity risk premium (MRP) for all bonds with
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Answer #1

The total maturity risk premium for a five-year bond = (5 - 1) * 0.15%

The total maturity risk premium for a five-year bond = 0.006

Yield on Lennar's five-year bonds = 0.061 + 0.006

Yield on Lennar's five-year bonds = 0.067

Yield on Lennar's five-year bonds = 6.7%

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