Sandino Corporation's 10-year, semiannual bond is currently selling at $850, with a coupon rate of 5%...

 

 

Transcribed Image Text:

Sandino Corporation's 10-year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nominal rate (YTM) of 7.12%. Given an annual maturity risk premium (MRP) of (t- 1)*0.10%, the bond's liquidity premium (LP) of 0.40% and default risk premium (DRP) of 3.30%, what is the risk-free (RF) rate? Your answer should be between 1.80 and 3.58, rounded to 2 decimal places, with no special characters. Sandino Corporation's 10-year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nominal rate (YTM) of 7.12%. Given an annual maturity risk premium (MRP) of (t- 1)*0.10%, the bond's liquidity premium (LP) of 0.40% and default risk premium (DRP) of 3.30%, what is the risk-free (RF) rate? Your answer should be between 1.80 and 3.58, rounded to 2 decimal places, with no special characters.

Answer rating: 100% (QA)

To calculate the riskfree rate ref based on the given information we need to adjust th... View the full answer