Question: B eBook A 5-year Treasury bond has a 5.5% yield. A 10-year Treasury bond yields 7.0%, and a 10-year corporate and yields 9.0%. The market

B eBook A 5-year Treasury bond has a 5.5% yield. A 10-year Treasury bond yields 7.0%, and a 10-year corporate and yields 9.0%. The market expects that inftation will average 1.9% over the next 10 years (IP20 -1.9%). 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 squidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond? Round your answer to one decimal place. *

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