Chapter 5 Spreadsheet Problem The Cost of Money Interest Rates) Assume the ex pected inflation rates fo nekt five vears are as follows Iniation Rate koe 6.0 4.0 Year 5.0 expected to be 3 percent. The maturity risk premium (MRP) is o.I percent per year to maturity for bonds with matunties greater than six months, with a mavimum MRP equal to 2 percent. The real risk free rate of retum is currently 2 5 percent, and it is expectred no reinain at this level long into the future. i. Compute the interest rates on Treasury securities with maturities equal to one year, two yuwrs, three year, four Mars five yearn, 10 yars, 20 yewrs, and 30 wirs 2. Draw the yield curve. h. Asaume that all the informatien given previously is the same and the defauslt nek peremiun fos premium for corporate bonds nated AAA Is I 5 percent whereas t s 4 peremt for corporme bonds ated B Compute the interest rates an A44 and B-uied sorpaveate bens witdh naturiew squa! t sne yas years, three years, four years, five yeas. I0 years, 20 yeaurs and 30 vears