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QUESTION 1 You require a risk premium of 3.5 percent on an investment in a company. The pure rate of interest in the market is

QUESTION 1

You require a risk premium of 3.5 percent on an investment in a company. The pure rate of interest in the market is 3.25 percent and the inflation premium is 3 percent. US Treasury bills are risk free. What should be the yield of the US Treasury bills? Use multiplicative form.

A.
5.06%

B.
5.32%

C.
6.35%

D.
6.09%

E.
5.83%

F.
5.58%

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