14) The real risk-free rate, r*, is 2.5%. Inflation is expected to average 1.85% a year for the next 4 years, after which time inflation is expected to average 4.65% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 8%, which includes a liquidity premium of 0.8%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.

16) A 5-year Treasury bond has a 3% yield. A 10-year Treasury bond yields 6.6%, and a 10-year corporate bond yields 8.6%. The market expects that inflation will average 3.6% over the next 10 years (IP10= 3.6%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond? Round your answer to two decimal places.