2) You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that one-year T-bills are currently earning 0.30 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real risk-free rate

=

0.25%

Default risk premium

=

1.05%

Liquidity risk premium

=

0.70%

Maturity risk premium

=

0.65%

a.	What is the inflation premium? (Round your answer to 2 decimal places. (e.g., 32.16))

Inflation premium

%

b.	What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places. (e.g., 32.16))

Fair interest rate

%