3. Calculating interest rates The real risk-free rate (r) is 2.8% and is expected to remain constant. Inflation is expected to be 4% per year for each of the next three years and 3% thereafter. The maturity risk premlum (MRP) is determined from the formula: 0.1(t1)%, where t is the security's moturity. The llquidity premium (LP) an ail Sacramone Products Co 's bonds is 1.05%. The following table shows the current relationship between bond ratings and defoult risk promiums (DRP): Sacramone Products Co. issues 10-year, AA-rated bonds. What is the yleid on one of these bonds? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average. 5.55% 7.95% 7.80% 8.35% Basad on your understanding of the determinants of interest rates, if everything alse remajns the same, which of the following will be true? A Bes-rated band has a lower default risk premium as compared to an AAA-rated bond, Higher infation expectations incresse the nominal interest rate demanded by investor