The market expects inflation to be 2% per year over the next 10 years. Assume that there is no maturity risk (MPR=0), the risk free rate will remain constant over the period, and a 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond. What is the yield on the 5 year corporate bond?

Bond Yield

10 Year corporate Bond 10.5%

10 Year Treasury Bond 9.1%

5 Year Treasury Bond 5.9%