Jeffery Marian, an analyst with Arlington Machinery, is estimating a country risk premium to include in his estimate of the cost of equity for a project Arlington is starting in India. Marian has compiled the following information for his analysis: Indian 10-year government bond yield=7.20%. 10-year U. S. Treasury bond yield =4.60%. Annualized standard deviation of the Bombay Sen stock index =40%. Annualized standard deviation of Indian dollar denominated 10-year government bond=24%. Annualized standard deviation of the S&P 500 Index = 18%. The estimated country risk premium for India based on Marian’s research is closest to:（）
A. 5.8%.
B. 2.6%.
C. 4.3%.
