Chandler Co$.\text{'}$s $5-$year bonds yield $9\mathrm{.}25\%,$ and $5-$year T$-$bonds yield $5\mathrm{.}15\%.$ The real risk$-$free rate is r$*=3\mathrm{.}0\%,$ the inflation premium for $5-$year bonds is IP $=1\mathrm{.}75\%,$ the liquidity premium for Chandler's bonds is LP $=0\mathrm{.}75\%$ versus zero for T$-$bonds, and the maturity risk premium for all bonds is found with the formula MRP $=($t $1)\backslash$times $0\mathrm{.}1\%,$ where t $=$ number of years to maturity. What is the default risk premium $($DRP$)$ on Chandler's bonds?

Select the correct answer.

a$.3\mathrm{.}08\%$

b$.4\mathrm{.}16\%$

c$.3\mathrm{.}89\%$

d$.3\mathrm{.}62\%$

e$.3\mathrm{.}35\%$