What is the yield on the bond

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Reference no: EM131054763

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 of 60 basis points

The default risk premium is 100 basis points

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: EM131054763

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