1. CT agency provided us with the following info regarding a 5-year bond: Real risk-free rate = 3% Inflation rate = 5%/year for each of next two years, 4% thereafter MRP = 0.4*(t 1) % where t is the securitys maturity, DRP = 1 % and Yield= i= 11%.; Find the LP (Liquidity Premium).

2. The real risk-free rate is 4%. Inflation is expected to be 2% for 2 years and 4% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury securities?

3. The Canadian government issues a Treasury bond that matures in 15 years has a yield of 7%. A French firm issues a 15-year corporate bond has a yield of 9.5%. Assume that the liquidity premium on the corporate bond is 2.5%. What is the default risk premium on the corporate bond?

4. Zoom Inc's 6-year bonds yield 6.50%. The real risk-free rate is r* = 0.5%, the default risk premium for Zoom's bonds is DRP = 0.40%, the liquidity premium on Zoom's bonds is LP = 2.2% versus zero on T-bonds, and the inflation premium (IP) is 1.5%. What is the maturity risk premium (MRP) on all 6-year bonds?

5. LSP Motors issues 10-year bond. Suppose you have the following info: Real risk-free rate = 3%, Inflation rate = 8% per year for each of next five years, 6% thereafter, MRP = 0.1*(t 1) % where t is the securitys maturity, LP = 0.55% and DRP=0.8%. What is the yield on this bond?