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Default risk premium 1 . Scanlon Corporation's 5 - year bonds yield 6 . 0 0 % and 5 - year T - bonds yield

Default risk premium
1. Scanlon Corporation's 5-year bonds yield 6.00% and 5-year T-bonds yield 3.90%. The real risk-free rate is r*=2.0%, the inflation premium for 5-year bonds is IP =1.50%, the liquidity premium for Scanlons bonds is LP =0.4% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP =(t 1)\times 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Scanlons bonds?
a.1.70%
b.1.80%
c.1.90%
d.2.00%
e.2.10%

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