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2- Key Corporation's 5-year bonds yield 11.75%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year

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2- Key Corporation's 5-year bonds yield 11.75%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Kex's bonds is LP=0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP =(t-1) X0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Key's bonds? a. 5.50% b. 5.85% c. 5.09% d. 7.31% e. 6.44%

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