The real risk-free rate (n) is 2.8% and is expected to remain constant. Inflation is expected to be 8% per year for each of the next three years and 7% thereafter The maturity risk premium (MRP) is determined from the formula: 0.1t - 1)%, where is the security's maturity. The liquidity premium (LP) on all Liukin Holdings Inc.'s bonds is 1.05%. The following table shows the current relationship between bond ratings and default risk premiums (ORP); Default Risk Premium Rating U.S. Treasury AAA AA 0.600 0.804 1.05% A BBB 1.45% Lukin Holdings Inc. Issues 12-year, AA-rated bonds. What is the yield on one of these bonds? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average 11.95% 5.75 13.00 11.90% Based on your understanding of the determinants of interest rates, if everything else remains the same, which of the following will be true? O ABB-rated bond has a lower default risk premium as compared to an AAA-rated bond. In theory, the yield on a bond with a longer maturity will be higher than the yield on a bond with a shorter maturity