You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 3.25 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:

(LG 2-6)

Real risk-free rate = 2.25%

Default risk premium = 1.15%

Liquidity risk premium = 0.50%
Maturity risk premium = 1.75%

a. What is the inflation premium?

b. What is the fair interest rate on Moore Corporation 30-year bonds?