Niendorf Corporation's 5-year bonds yield 11.25%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 3 year bonds is IP -1654, the default risk premium for Niendorf's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP (1) X 0.1%, where t number of years to maturity. What is the liquidity premium (LP) on Niendorf's bonds? a. 3.99% b..6.09% C. 4.36%
d..5.25% e. 4.41%
