Question
5-year Treasury bonds currently yields 5.15%, including zero default risk premium and zero liquidity premium. You are interested in buying ABC Inc.'s 5-year bonds (same
5-year Treasury bonds currently yields 5.15%, including zero default risk premium and zero liquidity premium. You are interested in buying ABC Inc.'s 5-year bonds (same maturity with 5-year Treasury bonds) and therefore you are analyzing the factors that may affect ABC Inc.'s bond rates. You estimate that the liquidity premium for ABC Inc.'s bond to be 0.61% and the default risk premium to be 1.65%.
What is the current market interest rate for ABC Inc.'s bond?
Please convert your answer into decimal form and round your answer to the fourth decimal. For example, 0.1234.
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