Suppose the real risk-free rate is 3.5%, the average future inflation rate is 2.9%, a maturity premium of 0.05% per year to maturity applies, i.e., MRP= 0.05%(t), where t is the years to maturity. Suppose also that a liquidity premium of 0.8% and a default risk premium of 1.1% applies to A-rated corporate bonds. How much higher would the rate of return be on a 8-year A-rated corporate bond than on a 5-year Treasury bond. Here we assume that the pure expectations theory is NOT valid. 2.05% 1.85% 1.65% 1.45% 1.25%