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Assume that you are now estimating a peso hurdle rate for a Mexican company with US operations. Which of the following would you use as
Assume that you are now estimating a peso hurdle rate for a Mexican company with US operations. Which of the following would you use as your risk free rate? (You can assume that Mexico's sovereign rating is Baa1 for both its local currency and foreign currency bonds) Question 2 options: The rate on a peso-denominated Mexican Government bond (6%) The rate on a 3-month US treasury bill (0.25%) None of the other The rate on a US dollar-denominated bond issued by the Mexican company (4.5%) The rate on a dollar-denominated Mexican Government bond (3.5%) The rate on a ten-year US treasury bond (2%)
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