Question: Hello, Can I get help with this one? The bank annual rate is throwing me off? The Bank of Fast Loans uses the following rating

Hello,

Can I get help with this one? The bank annual rate is throwing me off?

The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers.

Risk ClassRisk Premium (%)Prime.05High grade1.0Upper medium grade1.5Lower medium grade2.0Speculative: Non-investment grade4.0Speculative: Highly6.0Substantial risks9.0Extremely speculative12.0

The bank's pure rate of interest is 2% and the inflation premium is 3.5%.

The bank offers an annual rate of 9.79% to a customer. What is the risk class of this customer?

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