The real risk-free rate is 1.80%. Inflation is expected to be 2.60% this year and 3.30% during the next 2 years. Assume that the MRPt = 0.1(t-1)%. The default risk premium on corporate bonds is 1.25% and the liquidity premium on corporate bonds is 0.75%
1) What is the yield on 2-year Treasury securities?
2) What is the yield on 2-year corporate securities?
3) What is the difference between the yield on 3-year corporate and 3-year treasury securities?