Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.1% yield. A 10-year Treasury bond yields 6.6%, and a 10-year corporate bond yields 8.35%. The market expects that inflation will average 2.7% over the next 10 years (IP 10 = 2.7%). 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. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. M Open spreadsheet What is the yield on this 5-year corporate bond? Round your answer to two decimal places. % Interest rate premiums 4.10% 5-year Treasury yield (T5) 10-year Treasury yield (T 10) 6.60% 8.35% 10-year Corporate yield (C10) Inflation Premium over 10 years (IP10) Maturity Risk Premium (MRP) DRP Treasury LP Treasury DRPc5 + LPc5 = DRPC10 + LPC10 2.70% 0.00% 0.00% 0.00% Formulas #N/A Real risk-free rate, r* II Inflation premium over 5 years (IP5) #N/A DRP 10 + LP 10 #N/A 5-year Corporate yield (C5) #N/A