Drongo Corporation's 4 -year bonds currently yield 7.2 percent and have an inflation premium of 3.6%. The real risk-free rate of interest, r, is 2.6 percent and is assumed to be constant. The maturity risk premium (MRP) is estimated to be 0.1%(t1), where t is equal to the time to maturity. The default risk and liquidity premiums for this company's bonds total 0.7 percent and are believed to be the same for all bonds issued by this company. If the average inflation rate is expected to be 2.2 percent for years 5,6 , and 7 , what is the yield on a 7 -year bond for Drongo Corporation? 5.90% 6.90% 6.40% 7.40% 5.40% Suppose the real risk-free rate is 2.5%, the average future inflation rate is 2.3%, a maturity premium of 0.07% per year to maturity applies, i.e., MRP = 0.07%(t), where t is the years to maturity. Suppose also that a liquidity premium of 1% and a default risk premium of 0.7% applies to A-rated corporate bonds. How much higher would the rate of return be on a 7-year A-rated corporate bond than on a 5-year Treasury bond. Here we assume that the pure expectations theory is NOT valid. 1.84% 1.04% 1.24% 1.44% 1.64% Currently, 3-year Treasury securities yield 6.7\%, 7-year Treasury securities yield 6.3%, and 10 -year Treasury securities yield 6.8%. If the expectations theory is correct, what does the market expect will be the yield on 3-year Treasury securities seven years from today? 7.77% 7.97% 7.37% 7.17% 7.57%