2. [4 points] You are considering purchasing some AAA rated Verizon corporate bonds and want to compare yields for bonds with different maturities. You know that the real rate of interest is 1%. You have also discovered the following information Term to Maturity 1 year 3 years 5 years 10 years Inflation Premium 1.25% 1.35% 2% 3% Default Risk Liquidity/Marketability Maturity Risk Premium 25% 5% 75% Risk Premium 0% 6% 1% 2% Premium 0% 03% 05% 10% a. Calculate the nominal rate for 1,3, and 5-year bonds in the table Nominal Rate- Term to MatuityRisk Free Rate Inflarion PremmRisk Premium 1% 1.25% 0.25% 2.52 1% 1.35% 1.13% 3.52 1% 296 1.80% 4.87 10 1% 396 3.10% 7.25 b. You are quoted 7.1% for the 10-year bond. Determine the Default Risk Premium