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  3. niendorf corporation's 5-year bonds yield 7.25%, a

Niendorf Corporation's 5-year bonds yield 7.25%, and 5-year T-bonds yield 4.40%. The real risk-free rate...

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Niendorf Corporation's 5-year bonds yield 7.25%, and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.25%, the default risk premium for Niendorf's bonds is DRP = 1.20% 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 is the liquidity premium (LP) on Niendorf's bonds? O a. 2.05% b.2.45% O c 1.65% d. 2.00% O e 2.85%

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