If a Firm Has a Credit Risk Premium of 3

If a firm has a credit risk premium of 3 percent and the Treasury security rate is 4 percent, the firm will be able to borrow at ________. If the Fed implements a monetary policy that raises the Treasury security rate to 6 percent, the cost of borrowing for the firm will be ________.

A) 7 percent; 10 percent
B) 4 percent;  6 percent
C) 7 percent; 9 percent
D) 1 percent; 3 percent