Regarding Bond valuation

(a) Mills Company, a large defense contractor, on January 1, 2007, issued a 12% coupon interest rate, 5-year bond with a $1,000 par value that pays interest annually. Do a simple comparison between the Yield to maturity and the coupon interest rate if the Bond is sold at the following prices i. $ 1,000 ii. $ 887.00 iii. $ 1,134.20 (b) The real rate of interest is currently 3%; the inflation expectation and risk premiums for a number of securities follow. Security Inflation expectation Premium Risk Premium 3% 6% 2% 9% 8% 5% 11% 4% 1% Please do the following: i) Find the risk-free rate of interest, RF, that is applicable to each security, and ii) Find the nominal rate of interest for each security