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 five years and 7% thereafter. The maturity risk premium (MRP) is determined from the formula: 0.1(t-1%, where t is the security's maturity. The liquidity premium (LP) on all Rink Machine Co. 's bonds is 1.05%. The following table shows the current relationship between bond ratings and default risk premiums (DRP): Rating Default Risk Premium U.S. Treasury 0.60% 0.80% 1.05% 1.45% Rink Machine Co. 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. ? 12.07% ? 12.12% 0 5.75% ? 13.17% Based on your understanding of the determinants of interest rates, if everything else remains the same, which of the following will be true? O The yield on a AAA-rated bond will be lower than the yield on a AA-rated bond. O The yield on U.S. Treasury securities always remains static