eBook Calculator Problem 5-12 Use the interest rate model to solve the following problem. One-year treasury securities are yielding 12% and two-year treasuries maturity risk premium is zero for one-year debt and 1% for two-year debt. The real risk-free rate is 3.1%. what are the expected rates of inflatio for the next two years? (Hint: Set up a separate model for each term with the yearly inflation rates as unknowns.) decimal place. yield 13%. The Round your answer to one Feedback Y Check My Work Incorrect Problem 5-9 Mountain Sports Inc. borrowed money for two years last week at 12%. The pure rate is 2%, and Mountain's financial condition warrants a default risk premium of 2.5% and a liquidity risk premium of 1.1%. The maturity risk premium for two-year loans is 1%. Inflation is expected to be 3% next year. What does the interest rate model imply the lender expects the inflation rate to be in the following year? Round your answer to one decimal place. Feedback Check My Work Incorrect