Assume that the market thinks the real rate is 2.00%, the inflation premium is 2.70%, the bond's default risk justifies
Posted: Sun Jun 05, 2022 6:51 am
Assume that the market thinks the real rate is 2.00%, the
inflation premium is 2.70%, the bond's default risk justifies a
premium of 2.10%, the maturity premium is 0.50%, and the liquidity
premium is 1.10%. Since the cash flows are denominated in euros,
the foreign-exchange rate premium is 1.50%. What is the discount
rate?
A)
8.90%
B) 9.70%
C) 9.90%
D) None of these
inflation premium is 2.70%, the bond's default risk justifies a
premium of 2.10%, the maturity premium is 0.50%, and the liquidity
premium is 1.10%. Since the cash flows are denominated in euros,
the foreign-exchange rate premium is 1.50%. What is the discount
rate?
A)
8.90%
B) 9.70%
C) 9.90%
D) None of these