The real risk-free rate (r) is 2.8% and is expected to remain constant. Inflation is expected to be 8% per year for each of the next two years and 7% thereafter. The maturity risk premium (MRP) is determined from the formula: 0.1(t1)%, where t is the security's maturity. The liquidity premium (LP) on all Rinsemator Group's bonds is 1.05%. The following table shows the current relationship between bond ratings and default risk (DR): Rinsemator Group issues fourteen-year, AA-rated bonds. What is the yield on one of these bonds? Disregard cross-product terms; that is averaging is required, use the arithmetic average. 11.79% 12.04% 5.95% 13.09% Based on your understanding of the determinants of interest rates, if everything else remains the same, which of the following we true? A BBB-rated bond has a lower default risk premium as compared to an AAA-rated bond. An AAA-rated bond has less default risk than a BB-rated bond