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For the next 4 questions suppose the following data on yields from WSJ holds: 3-month T-Bill 30-year T-Bond 30-year AAA Corporate 30-year Municipal What is

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For the next 4 questions suppose the following data on yields from WSJ holds: 3-month T-Bill 30-year T-Bond 30-year AAA Corporate 30-year Municipal What is the real risk free rate for 3-month if the inflation for 3 months is estimated as 3.0967 5.0% 72% 8.6% 6.02% 1,8% o 20% 2.2% 2.4% 2.696 What is the maturity risk premium on 30-year Treasury bonds? Assume the expected inflation for 3-month T-Bills and 30-year T-Bonds are the same. 0.8% 10% 1.296 1.896 2.2% What is the default risk premium on 30-year AAA corporate bonds? Assume there exist liquid markets for AAA corporate bonds. o 0.8% 0 1.0% 0 1.296 1.4% 0 1.5% Assume the same risk for 30-year AAA Corporate bonds and 30-year Municipal Bonds. If you are indifferent between the two bonds what is your implied marginal tax rate? 25% O 28% 29% 30% 32%

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