Question: A 5 year treasure bond has a 3.5% yield. A 10 year treasury bond yields 5% and a 10 year corporate bond yields 10%. The

A 5 year treasure bond has a 3.5% yield. A 10 year treasury bond yields 5% and a 10 year corporate bond yields 10%. The market expects that inflation will average 2.5% over the next 10 years. Assume there is no Maturity Risk Premium. Assume the annual real risk free rate will remain constant over the next 10 years. A 5 year corporate bond has the same default risk premium and liquidity risk premium as the 10 year corporate bond described. What's the real risk-free rate, what's the 5 year inflation premium, what's the DRP and LP, what the yield on the 5 year corporate bond?

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