Question $13$

Georgia Education Inc. $5-$year bonds yield $6\mathrm{.}50\%,$ and $5-$year T$-$bonds yield $5\mathrm{.}15\%.$ The real risk$-$free rate $r^{**}=3\mathrm{.}0\%,$ the inflation premium for $5-$year bonds is IP $=1\mathrm{.}75\%,$ the liquidity premium for the company'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 $=(t-1)0\mathrm{.}1\%,$ where $t=$ a number of years to maturity. What is the default risk premium $($DRP$)$ on Georgia Education's bonds?

$0\mathrm{.}60\%$

$0\mathrm{.}46\%$

$0\mathrm{.}73\%$

$0\mathrm{.}47\%$