UICI ILI U TUULII DUUI REAL RISK-FREE RATE You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.1%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums: Inflation premium = 2.5% Liquidity premium = 0.8% Maturity risk premium = 1.4% Default risk premium = 2.6% On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places. SIITII C I II LITI EXPECTED INTEREST RATE The real risk-free rate is 3.25%. Inflation is expected to be 1.75% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero. a. What is the yield on 2-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places. % b. What is the yield on 3-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places. % UICI ILI U TUULII CUOIETTI DEFAULT RISK PREMIUM A Treasury bond that matures in 10 years has a yield of 4.25%. A 10-year corporate bond has a yield of 10%. Assume that the liquidity premium on the corporate bond is 0.25%. What is the default risk premium on the corporate bond? Round your answer to two decimal places