The Bank of Loans uses the following rating scheme to classify the riskiness of its customers.

Risk Class Risk Premium (%) Prime .05 High grade 1.0 Upper medium grade 1.5 Lower medium grade 2.0 Speculative: Non-investment grade 4.0 Speculative: Highly 6.0 Substantial risks 9.0 Extremely speculative 12.0

The bank's pure rate of interest is 4.5% and the inflation premium is 3%.

What rate would the bank offer a customer who is in the lower medium grade risk class?

A. 7.69%

B. 8.74%

C. 10.31%

D. 9.26%

E. 9.79%

F. 6.64%

G. 8.21%

H. 7.16%