You are considering an investment in $30-$year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall

Street Journa$/$ reports that $1-$year T$-$bills are currently earning $1\mathrm{.}25$ percent. Your broker has determined the following information about

economic activity and Moore Corporation bonds:

Real risk$-$free rate $=0\mathrm{.}75\%$

Default risk premium $=1\mathrm{.}15\%$

Liquidity risk premium $=0\mathrm{.}50\%$

Maturity risk premium $=1\mathrm{.}75\%$

a$.$ What is the inflation premium?

b$.$ What is the fair interest rate on Moore Corporation $30-$year bonds?

Note: Round your percentage answers to $2$ decimal places $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34).$

Expected inflation premium

Fair interest rate

$\frac{\%}{\%}$