The real risk-free rate of interest, is 3%, and it is expected to remain constant over time. Inflation is expected to be 2% per year for the next 3 years and 4% per year for the next 5 years. The maturity risk premium is equal to 0.1 x (t-1) %, where t = the bonds maturity. The default risk premium for a BBB-rated bond is 1.3%.

a- What is the average expected inflation rate over the next 4 years?

b-What is the yield on a 4-year Treasury bond?

c-What is the yield on a 4-year BBB-rated corporate bond with a liquidity premium of 0.5%?

d-What is the yield on an 8-year Treasury bond?

e-What is the yield on an 8-year BBB-rated corporate bond with a liquidity premium of 0.5%?