The real risk-free rate (r) is 2.80% and is expected to remain constant into the future. Inflation is expected to be 8.25% per year for each of the next three years and 7.05% thereafter. The maturity risk premium (MRP) is determined from the formula: 0.10 x (t-1) %, where t is the security's maturity. The liquidity premium (LP) on all Global Satellite Corp.'s bonds is 0.50%. The following table shows the current relationship between bond ratings and default risk premiums (DRP): Rating U.S. Treasury AAA Default Risk Premium 0.60% AA 0.80% ed A 1.05% BBB 1.45% Global Satellite Corp. issues fourteen-year, AA-rated bonds. What is the yield on one of these bonds? (Hint: Disregard cross-product terms; that is, if averaging is required, use an arithmetic average.)) 12.71% O 12.21% 5.40% 11.41% Based on your understanding of the determinants of interest rates, if everything else remains the same, which of the following will be true? OA BBB-rated bond has a lower default risk premium as compared to a AAA-rated bond. O Higher inflation expectations increase the nominal interest rate demanded by investors