FIN 308 - HW ASSIGNMENT #3 INTEREST RATES - COST OF MONEY 1. You have determined the following data for a given bond: Real risk-free rate (r*) = 3%; inflation premium = 8%; default risk premium = 2%; liquidity premium = 2%; and maturity risk premium = 1%. What is the nominal risk-free rate, id)? Nominal risk-free rate = risk-free rate + Inflation preminum = 3 + 8 = 11% 2. Refer to Problem 1. What is the interest rate on long-term Treasury securities, or T- bonds, of the relevant maturity? 3. Refer to Problem 1. What is the interest rate on short-term Treasury securities, or T- bills, of the relevant maturity? 4. Refer to Problem 1. What is the interest rate on long-term corporate bonds, of the relevant maturity? 5. Refer to Problem 1. What is the interest rate on short-term corporate bonds, of the relevant maturity