Final answer:
The maturity premium is estimated to be 3.25%, which is the difference between the 20-year Treasury bond interest rate (5.5%) and the Treasury bill rate (2.25%). The default premium for the AAA-rated corporate bond with the same maturity is 3.5%, calculated as the difference between the corporate bond rate (9%) and the Treasury bond rate (5.5%).
Step-by-step explanation:
To estimate the default premium and the maturity premium for the given investment opportunities, we will compare the interest rates of the Treasury bill, Treasury bond, and corporate bond. The Treasury bill, which is considered risk-free, has an interest rate of 2.25%. Comparing this with the Treasury bond's rate of 5.5%, we can deduce that the maturity premium for a 20-year bond is 5.5% - 2.25% = 3.25%. This reflects the extra yield required by investors for the increased risk of a longer-term investment.
Now, we will estimate the default premium by comparing the Treasury bond to the AAA-rated corporate bond. The corporate bond has an interest rate of 9%, which includes both the default and maturity premiums over the risk-free rate. Since we already determined that the maturity premium is 3.25%, the default premium for the corporate bond would be 9% - 5.5% = 3.5%. This premium compensates investors for the additional risk of potential default associated with corporate bonds compared to government securities.