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What is the risk class of the customer

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The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers.

Risk Class                         Risk Premium (%)

Prime                                       .05

High grade                                 1.0

Upper medium grade                      1.5

Lower medium grade                       2.0

Speculative: Non-investment grade   4.0

Speculative: Highly                           6.0

Substantial risks                               9.0

Extremely speculative                            12.0

The bank's pure rate of interest is 2% and the inflation premium is 3.5%.

Question 1: The bank offers an annual rate of 15.07% to a customer. What is the risk class of this customer?

Reference no: EM132604406

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