3. Calculating interest rates The free rate() is 2.0 and is expected to remain constant Inflation is expeded to be per year for each of the two years and 24 then after the maturity risk premium CHAP) is determined from the formula: 0.1(t-1), where the security maturity. The liquidity premium (P) on TR Warehoning bonds 1.05%. The following table shows the current relationship between bond rating and default risk pronkoms (0) Default Risk Premium Rating US Treasury AAA 0.60% AA 0.80 A 1.05% 1.455 BTR Warehousing issues 14-year, A-rated bonds. What is the vield on one of these bonds? Disregard cross-product terms; that is, averaging is required, use the arithmetic average 07.045 @ 8.00 5.95 5.79 Based on your understanding of the determinants of interest rates, If everything else remains the same, which of the following will be true? lohet inflation expectations increase the nominal interest rate demanded by investors De Vield US Treasury securities always remains static The real risk-free rate (r*) is 2.8% and is expected to remain constant Inflation is expected to be 3% per year for each of the next two years and 2% thereafter The maturity risk premium (MRP) is determined from the formula: 0.1(t-1)%, wheret is the security's maturity. The liquidity premium (LP) on all BTR Warehousing's bonds is 1.05%. The following table shows the current relationship between bond ratings and default risk premiums (DRP): Default Risk Premium Rating U.S. Treasury AAA 0.60% 0.80% A 1.05% BBB BTR Warehousing issues 14-year, aw rated bonds. What is the yield on one of these bonds? Disregard cross product terms; that is, if averaging is required, use the arithmetic average. 7.04% 08.09 6.79% Based on your understanding of the determinants of interest rates, if everything else remains the same, which of the following will be true? Higher inflation expectations increase the nominal interest rate demanded by investors. The yield on U.S. Treasury securities always remains static