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 2.0% and the inflation premium is 3%.

What rate would the bank offer a customer who is in the upper medium grade risk class? A. 8.20%

B. 7.68%

C. 6.11%

D. 7.16%

E. 6.64%

F. 8.73%