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Sandino's Corporation's 10-year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nomial rate (YTM) of 7.12%. Given an

Sandino's Corporation's 10-year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nomial rate (YTM) of 7.12%. Given an annual maturity risk premium (MRP) of (t-1)*0.10%, the bond's liquidity premium (LP) of 0.40% and default risk premium (DRP) of 2.65%, what is the risk-free rate?
Your answer should be between 1.80 and 3.58.

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