Question 6 Kern Corporation's 5-year bonds yield 7.10% and 5-year T-bonds yield 3.90%. The real risk-free rate is r* = 2.58%, the default risk premium for Kern's bonds is DRP = 1.90% versus zero for T-bonds, the liquidity premium on Kern's bonds is LP=1.3%, and the number of years to maturity. What is maturity risk premium for all bonds is found with the formula MRP = (t-1) x 0.1%, where t = the inflation premium (IP) on all 5-year bonds? O 0.92% O 0.82% O 1.08% O 1.24% 2.5 pts O 1.00%

Kern Corporation's 5-year bonds yield 7.10\% and 5-year T-bonds yield 3.90%. The teal risk-free rate is t2.58%, the defauit risk premium for Kern's bonds is DRP =1.90% versus zero for T-bonds, the liquidity premium on Kem's bonds is LP 1.3%, and the maturity risk premium for all bonds is found with the formula MRP (t1)0.1%, where 1 - number of years to maturity. What is the inflation premium (IP) on all 5-year bonds? 0.92% 0.82% 1.08% 1.24% 1.00%