Nominal rate of ten-year treasury-risk free real rate

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Reference no: EM131054783

You have been asked to determine a rate on a bond. It has a maturity of 10 years, a coupon of 6.00%, and a par value of 1000. You are given the following information

Risk free real rate = 1.80% for ten year treasury

The Inflation Risk Premium is 1.70%

The bond has a liquidity premium 0.60%.

The default risk premium is 1%.

The current market risk premium is .0002 times the maturity in years

1. What is the yield on the bond?

2. What is the nominal rate of the ten-year treasury?

Reference no: EM131054783

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