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The real risk-free rate of interest is expected to remain constant at 4%. Inflation is expected...

The real risk-free rate of interest is expected to remain constant at 4%. Inflation is expected to be 6% this year, 5% next year and 4% per year thereafter. The maturity risk premium (MRP) is equal to 0.1(t-1)%, where t = the bond’s maturity. A 5-year corporate bond yields 9%. What is the yield on a 10-year corporate bond that has the same default risk and liquidity premiums as the 5-year corporate bond?

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