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What interest rate would you expect to pay on the issue

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You would like to issue a 10 year bond and anticipate that the market requires a 3% default risk premium, of which part of the issue would add 1% liquidly premium to the required interest rate.

The 10 year treasury rate is 2% and the TIPS rate is 0.4%.

If the 10 year maturity premium is 0.4%, what interest rate would you expect to pay on the issue?

a. 4.4%

b. 4.8%

c. 6.4%

d. 6.8%

Reference no: EM132107929

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