A $5-$year Treasury bond has a $3\mathrm{.}7\%$ yield. A $10-$year Treasury bond yields $6\mathrm{.}25\%,$ and a $10-$year corporate bond yields $8\mathrm{.}15\%.$ The market expects that inflation will average $3\mathrm{.}45\%$ over the next $10$ years $($IP$10=3\mathrm{.}45\%).$ 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. What is the yield on this $5-$year corporate bond? Round your answer to two decimal places. Interest rate premiums $5-$year Treasury yield $($T$5)3\mathrm{.}70\%10-$year Treasury yield $($T$10)6\mathrm{.}25\%10-$year Corporate yield $($C$10)8\mathrm{.}15\%$ Inflation Premium over $10$ years $($IP$10)3\mathrm{.}45\%$ Maturity Risk Premium $($MRP$)0\mathrm{.}00\%$ DRP Treasury $0\mathrm{.}00\%$ LP Treasury $0\mathrm{.}00\%$ DRPC$5+$ LPC$5=$ DRPC$10+$ LPC$10$ Real risk$-$free rate, r$*$ Inflation premium over $5$ years $($IP$5)$ DRP$10+$ LP$105-$year Corporate yield $($C$5)$