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1) An investor in Treasury security expects inflation to be increasing by 1% at the end of every year. (Starting with 1% at year 1)

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1) An investor in Treasury security expects inflation to be increasing by 1% at the end of every year. (Starting with 1% at year 1) Assuming that the RFR is 3% that will remain constant, and the treasury security matures in 3 years what will be the MRP of this security? 2) A Treasury bond with maturity of 5 years is yielding a 5% while a corporate bond with same maturity yields 6%. Assuming that Liquidity premium is 0.6% what is the default risk premium

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