Exercise Real risk-free rate is 2%. Inflation is expected to be 3% in Year 1, 4% in Year 2, and 3.5% for years 3 to 7. Assume maturity risk premium is estimated to be 0.0005 x (t-1). What is the nominal interest rate for a 7 year government T-bond? a 7 - ear AAA corporate bond with a default risk premium of 0.5%