15. The real risk-free rate is 3% and inflation is expected to be 4% for the next 2 years, a 2 year U.S. treasury security yields 9 %, what is the maturity risk premium for 2 year security?*

a) 4%

b) 3%

c) 2%

d) 5%

e) None of the above

16. Suppose 8-year T-bonds have a yield of 6.30% and 9-year corporate bonds yield 9.75%. Also, corporate bonds have a 1.25% liquidity premium versus a zero liquidity premium for T-bonds. What is the default risk premium on corporate bonds?*

a) 3.2%

b) 2.2%

c) 9.75%

d) 5.05%

e) None of the above