Global Satellite Corp. issues $7-$year, AA$-$rated bonds. What is the yield on one of these bonds? Disregard cross$-$product terms; that is$,$ if averaging is

required, use the arithmetic average.

$11\mathrm{.}91\%$

$5\mathrm{.}25\%$

$12\mathrm{.}36\%$

$12\mathrm{.}96\%$

Based on your understanding of the determinants of interest rates, if everything else remains the same, which of the following will be true?

In theory, the yield on a bond with a longer maturity will be higher than the yield on a bond with a shorter maturity.

A BBB$-$rated bond has a lower default risk premium as compared to an AAA$-$rated bond.