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The real risk-free rate of interest, r*, is 4%, and it is expected to remain constant over time. Inflation is expected to be 2% per

The real risk-free rate of interest, r*, is 4%, and it is expected to remain constant over time. Inflation is expected to be 2% per year for the next three years, after which time inflation is expected to remain at a constant rate of 5% per year. The maturity risk premium is equal to 0.1(t 1)%, where t is the bonds maturity. The liquidity and default risk premia on 10-year corporate bonds are 2.0% and 2.5%, respectively. What is the yield to maturity on a 10-year corporate bond? 8.1% 8.9% 9.0% 12.1% 13.5%

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