1.Expected Interest Rate
The real risk-free rate is 3.5%. Inflation is expected to be 2.25% this year and 4.5% during the next 2 years. Assume that the maturity risk premium is zero.
a.What is the yield on 2-year Treasury securities? Round your answer to two decimal places.

b.What is the yield on 3-year Treasury securities? Round your answer to two decimal places.

2.Default Risk Premium
A Treasury bond that matures in 10 years has a yield of 4.5%. A 10-year corporate bond has a yield of 8.75%. Assume that the liquidity premium on the corporate bond is 0.65%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

3.Maturity Risk Premium
The real risk-free rate is 2.25%, and inflation is expected to be 2.5% for the next 2 years. A 2-year Treasury security yields 8.75%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places.

4.Expectations Theory
One-year Treasury securities yield 3.2%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 5.85%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Round your answer to two decimal places.

5.Expected Interest Rate
The real risk-free rate is 3.3%. Inflation is expected to be 3.15% this year, 4.25% next year, and then 3.4% thereafter. The maturity risk premium is estimated to be 0.05(t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Round your answer to two decimal places.