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Kelly Inc's 5-year bonds yield 7.50% and 5-year T-bonds yield 6.00%. The real risk-free rate is r=2.5%, the default risk premium for Kelly's bonds is

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Kelly Inc's 5-year bonds yield 7.50% and 5-year T-bonds yield 6.00%. The real risk-free rate is r=2.5%, the default risk premium for Kelly's bonds is DRP =0.40%, the liquidity premium on Kelly's bonds is LP=1.1% versus zero on T-bonds, and the inflation premium (IP) is 1.5%. What is the maturity risk premium (MRP) on all 5 -year bonds? a) 1.84% b) 2.42% c) 2.06% d) 2.00% e) 2.12%

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