Question: Answer these two questions please 4- The 1 -year T-bill rates over the next five years are expected to be 3 %, 3. 5%, 4

Answer these two questions please

4- The 1-year T-bill rates over the next five years are expected to be 3%, 3.5%, 4%, 4.5%, and 5%. If the 5-year T-bonds are yielding 7%, what is the liquidity premium on this bond?

5- Using the information from question 4, now assume that the investor prefers holding short-term bonds. A liquidity premium of 10 basis points is required for each year of a bonds maturity. What will be the interest rates on a 3-year bond, 4-year bond, and a 5-year bond?

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