.. Calculating interest rates The real risk-free rate (r) is 2.8% and is expected to remain constant. Inflation is expected to be 7% per year for each of the next five years and 6% thereafter. The maturity risk premium (MRP) is determined from the formula: 0.1(t-1) %, where t is the security's maturity The liquidity premium (LP) on all Global Satellite Corp.'s bonds is 0.55%. 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% 1.05% BBB 1.45% Global Satellite Corp. issues 13-year, AA-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. O O O 11.18% 10.53% 5.35% 11.73% Based on your understanding of the determinants of interest everything else remains the same, which of the following will be true? The yield on U.S. Treasury securities always remains static. The yield on a AM-rated bond will be lower than the yield on a AA-rated bond