Question $8$

$2$ Points

Assume that you are estimating a US dollar hurdle rate for a Mexican company with US operations. Which of the following would you use as your risk free rate? $($You can assume that Mexico's sovereign rating is Baa$1$ for both its local currency and foreign currency bonds$)$

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Time

$30$ mi

$q,$

Atter

$2$ atte

The rate on a ten$--$year US treasury bond $(2\%)$

The rate on a $3-$month US treasury bill $(0\mathrm{.}25\%)$

The rate on a dollar denominated Mexican Government bond $(3\mathrm{.}5\%)$

Descriptio

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The rate on a peso denominated Mexican Government bond $(6\%)$

The rate on a US dollar denominated bond issued by the Mexican company $(4\mathrm{.}5\%)$

None of the above