(Answered) Questioncalculate a table of interest rates based on the

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Question:

Calculate a table of interest rates based on the following information:

The pure interest rate is 1.6%.

Inflation expectations for year 1 = 3%, year 2 =3.5%, years 3-5 =5%.

The default risk is .1% for year one and increases by .2% over each year.

Liquidity premium is 0 for year 1 and increases by .2% each year.

Maturity risk premium is 0 for years 1 and 2 and .2% for years 3-5.

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