a. Deriving Current Interest Rates. Assume that interest rates for one-year securities are expected to be 0.08 today, 0.08 one year from now and 0.03 two years from now. Using only the pure expectations theory, what are the current interest rates on three-year securities. Enter the answer as a decimal using 4 decimals (e.g. 0.1234).

b. A corporation is planning to sell its 90-day commercial paper to investors offering an 0.08 yield. If the three-month T-bills annualized rate is 0.04, the default risk premium is estimated to be 0.002 and there is a 0.004 tax adjustment, what is the appropriate liquidity premium? Enter the answer as a decimal using 4 decimals (e.g. 0.1234).

c.A corporation is planning to sell its 90-day commercial paper to investors offering, but it is not sure what yield to offer. If the three-month T-bills annualized rate is 0.06, the default risk premium is estimated to be 0.001, the liquidity premium is 0.004 and there is a 0.005 tax adjustment, what is the appropriate yield to be offered on the commercial paper? Enter the answer as a decimal using 4 decimals (e.g. 0.1234).