Kop Corporation's 5-year bonds yield 6.50%, and T-bonds with the same maturity yield 3.00%. The default risk premium for

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answerhappygod
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Kop Corporation's 5-year bonds yield 6.50%, and T-bonds with the same maturity yield 3.00%. The default risk premium for

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Kop Corporation's 5-year bonds yield 6.50%, and T-bonds with thesame maturity yield 3.00%. The default risk premium for Kop's bondsis DRP = 0.40%, the liquidity premium on Kop's bonds is LP = 3.10%versus zero on T-bonds, the inflation premium (IP) is 1.46%, andthe maturity risk premium (MRP) on 5-year bonds is 0.40%. What isthe real risk-free rate, r*?
Group of answer choices
1.01%
0.99%
1.21%
1.10%
1.14%
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