Assume the Real Risk-Free Rate is 1.5%, T-Bills are paying 2%, T-Bonds are paying 3.7%, High-Quality Corporate Bonds are paying 4.9%, and the rate on the bonds of Harold Sakata Hat Company, a very illiquid bond, is 5.2%. Based on this information, in order, what are the “Liquidity Premium” of Sakata, and the “Inflation Premium?” Respectively:
a. .3%, and 1.2%
b. 1.7%, and .3%
c. .3%, and .5%
d. .5%, and .3%