What is the current market risk premium implied by the following information about EEM Company’s bonds, assuming that the market for the bonds is in equilibrium?
Par value: $1,000
Years to maturity: 20 years
Coupon rate: 8% paid semiannually
Current market price: $980
Current risk-free rate: 5%
Beta of the bond: 0.5
a. 6.41%
b. 7.50%
c. 8.12%
d. 6.00%
e. 8.56%