pter $6$: Interest Rates

Check My Work $(1$ remaining$)$

Crockett Corporation's $5-$year bonds yield $6\mathrm{.}35\%,$ and $5-$year T$-$bonds yield $4\mathrm{.}45\%.$ The real risk$-$free rate is $r^{**}=2\mathrm{.}80\%,$ the default risk premium for Crockett's bonds is DRP $=1\mathrm{.}00\%$ versus zero for T$-$bonds, the liquidity premium on Crockett's bonds is $LP=0\mathrm{.}90\%$ versus zero for T$-$bonds, and the maturity risk premium for all bonds is found with the formula MRP $=(t-1)0\mathrm{.}1\%,$ where $t=$ number of years to maturity. What inflation premium $($IP$)$ is built into $5-$year bond yields?

a$.1\mathrm{.}65\%$

b$.1\mathrm{.}25\%$

c$.1\mathrm{.}22\%$

d$.1\mathrm{.}00\%$

e$.0\mathrm{.}75\%$