The real risk-free rate (r") is 2.80% and is expected to remain constant Into the future. Inflation is expected to be 7.50% per year for each of the next four years and 6.30% thereafter. The maturty risk premium (MRP) is determined from the formula: 0.10 x (t - 1)%, wheret is the security's maturity. The liquidity premium (LP) on all Sacramane Products Co's bonds is 1.10%. The following table shows the current relationship between bond ratings and default risk premiums (DRP): Default Risk Premium Rating U.S. Treasury AAA 0.60% 0.80% AA 1.05% BBB 1.45% Sacramone Products Co. issues thirteen year AA-rated bonds. What is the yield on one of these bonds? (Mint Disregard cross-product terms that he averaging is required, use an arithmetic average.) 11.37% 12.57% 11.47% 5.90% Based on your understanding of the determinants of interest rates, If everything else remains the same, which of the following will be true? In theory, the yield on a bond with a longer maturity will be higher than the yield on a bond with a shorter maturity A BB-rated bond has a lower default risk premium as compared to a AAA-rated bond