You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 1.25 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real risk-free rate = 0.75% *Please see that this is asking for real risk-free rate versus real interest rate* Please explain the difference.

Default risk premium = 1.15%

Liquidity risk premium = 0.50%

Maturity risk premium = 1.75%

a) what is the inflation premium? Please explain the calculation.

b) what is the fair interest rate on Moore Corporation 30-year bonds?