Help Please I am Confused

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 yeat, and 5.10% the third year, then the average expected inflation rate over the next three years is 31.05+3.005+5.10%=3.53%. If also you can estimate that the matunty nisk premium is 0.1(t1)%, where t is number of years to matunty, then the vield on a 1-year Treasury bill, which has neither default risk premium nor liquidity risk premium, is as follows: FTT=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 secunties, corporate bonds have both a default nisk premium and a liquidity risk premium. Suppose that the liquidity premium on 3-year bonds is LP=0.45%, and the default risk premium on 3 -year bonds is DRP=1.40%. The formula for calculating the yield on a corporate bond is Suppose you had bought a 30 -year Treasury bond at a nominal interest rate of 0.5% and the inflation averages 2% over the next 30 years. Then the real interest rate would turn out to be \%. (Hint: Type in the negative sign, if needed.) The quoted (or nominal) interest rate on a debt security, r, is composed of a real risk-free rate, r, plus several premiums that reflect inilation, the security's risk, its liquidity (or marketability), and the years to its maturity: The quoted interest rate, r=r+IP+DRP+LP+MRF =rn+DRP+LP+MRP Complefe 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=0.45%, and the default risk premium on 3 -year bonds is DRP=1.40%. The formula for calculating the yield on a corporate bond is rear=r+IP+LP+MRP romp=IP+DRP+LP+MRP rcorp=IP+LP+MRP rorp=r+IP+DRP+LP+MRP The yield on a 3-year corporate bond is