For example, if you know that the real rate of interest is 4% and it is expected to remain constant for the next 3 years, inflation is expected to be 1.60% next year, 3.90% the following year, and 5.40% the third year, then the average expected inflation rate over the next three year 31.60%+3.90%+5.40%=3.63%. If also you can estimate that the maturity risk premium is 0.1(t1)%, where t is number of years to maturity, then the yield on a 1-year Treasury bill, which has neither default risk premium nor liquidity risk premium, is as follows: rT1=r+IP1+MRP1=4%+1.60%+0.1(11)%=5.60% Complete the following table by calculating yields on a 2- and 3-year Treasury bills, respectively. Unlike Treasury securities, corporate bonds have both a default risk premium and a liquidity risk premium. Suppose that the liquidity premium on 3 -year bonds is LP=0.35%, and the default risk premium on 3 -year bonds is DRP=1.50%. The formula for calculating the yield on a corporate bond is rcorp=r+IP+DRP+LP+MRPrcorp=IP+LP+MRPrcorp=IP+DRP+LP+MRPrcorp=r+IP+LP+MRP The yield on a 3-year corporate bond is Suppose the real risk-free rate of interest is r=4% and it is expected to remain constant over time. Inflation is expected to be 1.60% per year for the next 4 years and 3.90% per year for the next 6 years. The maturity risk premium is 0.1(t1)%, where t is number of years to maturity, a liquidity premium is 0.35%, and the default risk premium for a corporate bond is 1.50%. Complete the following table by calculating yields on Treasury and corporate bonds of various maturity. For example, if you know that the real rate of interest is 4% and it is expected to remain constant for the next 3 years, inflation is expected to be 1.60% next year, 3.90% the following year, and 5.40% the third year, then the average expected inflation rate over the next three year 31.60%+3.90%+5.40%=3.63%. If also you can estimate that the maturity risk premium is 0.1(t1)%, where t is number of years to maturity, then the yield on a 1-year Treasury bill, which has neither default risk premium nor liquidity risk premium, is as follows: rT1=r+IP1+MRP1=4%+1.60%+0.1(11)%=5.60% Complete the following table by calculating yields on a 2- and 3-year Treasury bills, respectively. Unlike Treasury securities, corporate bonds have both a default risk premium and a liquidity risk premium. Suppose that the liquidity premium on 3 -year bonds is LP=0.35%, and the default risk premium on 3 -year bonds is DRP=1.50%. The formula for calculating the yield on a corporate bond is rcorp=r+IP+DRP+LP+MRPrcorp=IP+LP+MRPrcorp=IP+DRP+LP+MRPrcorp=r+IP+LP+MRP The yield on a 3-year corporate bond is Suppose the real risk-free rate of interest is r=4% and it is expected to remain constant over time. Inflation is expected to be 1.60% per year for the next 4 years and 3.90% per year for the next 6 years. The maturity risk premium is 0.1(t1)%, where t is number of years to maturity, a liquidity premium is 0.35%, and the default risk premium for a corporate bond is 1.50%. Complete the following table by calculating yields on Treasury and corporate bonds of various maturity