Question 22 2 pts The real risk free rate (r*) is 2%. Inflation, over the next 5 years, is expected to average 3%. The Default Risk Premium for AAA rate borrowers is 1%. The Liquidity Premium for AAA borrowers is 1%. The Maturity Risk Premium for 5 year bonds is 2%. Big Company, a AAA rated company, intends to issue bonds with a 5 year maturity. At what rate of interest should Big Company expect to issue its bonds? a. 6% b. 7% C. 8% d. 9% e. 10% Question 23 2 pts The Federal Government intends to issue some 5 year bonds. The real risk free rate (r*) is 2%. Inflation, over the next 5 years, is expected to average 3%. The Default Risk Premium for AAA rate borrowers is 1%. The Liquidity Premium for AAA borrowers is 1%. The Maturity Risk Premium for 5 year bonds is 2%. Big Company, a AAA rated company, intends to issue bonds with a 5 year maturity. At what rate of interest should Federal Government expect to issue its bonds? a. 6% O b. 7% C. 8% d. 9% e. 10%