12. For the foreseeable future, the real risk-free rate of interest, r*, is expected to

remain at 2%. Inflation is expected to steadily increase over time. The maturity risk premium

equals 0.1(t-1)%, where "t" represents the bond's maturity. On the basis of this information, which

of the following statement is most correct.?

a. The yield on a 10-year Treasury security must exceed the yield on a 2-year Treasury security.

b. The yield on a 10-year Treasury security must exceed the yield on a 5-year Corporate bond.

c. The yield on a 10-year Corporate bond must exceed the yield on a 8-year Treasury security.

d. Statements a and b are correct.

e. Statements a and c are correct.