Question 4, Mini Case. Chapter 2 (similar to) A HW Score: 0%, 0 of 4 points AR Points: 00f 1 On the first day of your summer internship, you've been assigned to work with the Chief Financial Officer (CFO) of SanBlas Jewels Inc. Not knowing how well trained you are, the CFO has decide test your understanding of interest rates. Specifically, she asks you to provide a reasonable estimate of the nominal interest rate for a new issue of AAA-rated bonds to be offered by SanBlas Jewe Inc. The final format that the chief financial officer of SanBlas Jewels has requested is that of equation (2-1) in the text: real risk-free interest rate + inflation premium + default-risk premium Nominal interest rate = + maturity-risk premium + liquidity-risk premium Some agreed-upon procedures related to generating estimates for key variables in equation (2-1) follow. a. The current 3 percent. -month Treasury bill rate is 3:06 percent, the 30-year Treasury bond rate is 5.53 percent, the 30-year AAA-rated corporate bond rate is 6.87 percent, and the inflation rate is 2.23 b. The real risk-free rate of interest is the difference between the calculated a . The default-risk premium is estimated by the difference between the avera d. The maturity-risk premium is estimated by . SanBlas Jewels' bonds will be traded on t bonds is more uncertain than that of some verage yield on 3-month Treasury bills and the inflation rate. ge yields on AAA-rated bonds and 30-year Treasury bonds the difference between the average yields on 30-year Treasury bonds and 3-month Treasury bills. he New York Bond Exchange, so the liquidity-risk premium will be slight. It will be greater than zero, however, because the secondary market for the firm's other jewelry sellers, It is estimated at 4 basis points. A basis point is one one-hundredth of 1 percent. Now place your output into the format of equation (2-1) the CFO. s0 that the nominal interest rate can be estimated and the size of each variable can also be inspected for reasonableness and discussion with e What is the real risk-free interest rate? D% (Round to two decimal places.)