Assume that the real risk-free rate is r 315 and the

Question

Review the interest rate calculations examples provided in your text, and determine the following (set calculations to 4 decimal places):

1. Calculate the 10-year and 15-year estimated interest rate based on the following information:
   • MRP = 0.19(t - 1)
   • Real rate or r* = 4
   • Inflation in year 1 and 2 = 3%, inflation in 3 and 4 = 5%, and inflation in year 5 and beyond = 7%
   • Present your solution in the same format as in learning sphere activities and the textbook chapter reading in this Learning Process.
2. If the real interest rate during the year was 3% and the interest rate during that period for 1 year US Treasury was 7.25%, what was the inflation rate of interest?
3. Assume that the real risk-free rate is r* = 3.15% and the average expected inflation rate is 2.2% for each future year. The bond's DRP is 1%, LP is 0.05%, and the MRP is expected to be 1.5%. What is Bond's interest rate?