Suppose today is January 2, 2022, and investors expect the annual nominal risk-free interest rates in 2026 and 2027 to be: Year One-Year Rate (rRF) 2026 4.5 % 2027 1.9 Currently, a four-year Treasury bond that matures on December 31, 2025 has an interest rate equal to 2.0 percent. Assume the bonds have no risk. What is the yield on Treasury bonds that mature at the end of 2026 (a five-year bond)? Round your answer to one decimal place. % What is the yield on Treasury bonds that mature at the end of 2027 (a six-year bond)? Round your answer to one decimal place. %

A Treasury bond that settles on May 18, 2019, matures on December 31, 2031. The coupon rate is 9.65 percent, and the quoted price is 106 12/32. What is the bond’s yield to maturity? Payments are semi-annually.

A 5-year Treasury bond has a 4.35% yield. A 10-year Treasury bond yields 6.5%, and a 10-year corporate bond yields 9.8%. The market expects that inflation will average 2.85% over the next 10 years (IP10 = 2.85%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.     Open spreadsheet   What is the yield on this 5-year corporate bond? Round your answer to two decimal places. fill in the blank %

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