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12. Zoom Corporation's 5-year bonds yield 7.30% and 5-year T-bonds yield 4.10%. The real risk-free rate is r* = 2.5%, the default risk premium for

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12. Zoom Corporation's 5-year bonds yield 7.30% and 5-year T-bonds yield 4.10%. The real risk-free rate is r* = 2.5%, the default risk premium for Zoom's bonds is DRP = 1.90% versus zero for T-bonds, the liquidity premium on Zoom's bonds is LP = 1.3%, 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 inflation premium (IP) on all 5-year bonds? * Oa) 1.20% O b) 1.32% c) 1.45% d) 1.60% O e) None of the above

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