5-year Treasury bonds yield 4.2%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4%. What is the real risk-free rate, r*?

Select the correct answer.

a. 1.90%

b. 1.22%

c. 2.24%

d. 2.58%

e. 1.56%