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Crockett Corporation's 5-year bonds yield 6.70%, and 5-year T-bonds yield 4.85%. The real risk-free rate...

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Crockett Corporation's 5-year bonds yield 6.70%, and 5-year T-bonds yield 4.85%. The real risk-free rate is r* - 2.30%, the default risk premium for Crockett's bonds is DRP - 0.95% versus zero for T-bonds, the liquidity premium on Crockett's bonds is LP -0,90% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP -(t-1) * 0.1%, where t = number of years to maturity. What inflation premium (IP) is built into 5-year bond yields? a 1.65% b. 0.95% c2.10% d. 2.15% O O 2554

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