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Suppose Shreiker Incorporated is planning to massively expand inventory and will issue 26-week commerclal paper to obtain funding for the expansion. Prior to issuing the

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Suppose Shreiker Incorporated is planning to massively expand inventory and will issue 26-week commerclal paper to obtain funding for the expansion. Prior to issuing the commercial paper, Shreiker Incorporated must determine the yield that it must offer to successfully sell the debt securities. Upon further analysis of the key characteristics used to determine the appropriate yield of a security, Shreiker Incorporated learns the following: 1. The annualized yleld on a risk-free 26-week Treasury bill is 5 percent. 2. A 2 percent credit risk premium is needed to compensate investors for credit risk. 3. A 0.3 percent liquldity premium is needed to compensate investors due to the low Hiquidity of the Treasury bilis. 4. A 0.2 percent tax adjustment is needed to compensate investors for a difference in tax status. What is the appropriate yield to be offered on the commercial poper? 3.50% 5.80% 6.90% 7.50%

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