The Indian government had 10-year Rupee bondsoutstanding, with a yield to maturity of about 6.40% onJanuary 1, 2017.

In January 2017, the Indian government had a local currencysovereign rating of Baa3. The typical default spread (over adefault free rate) for Baa3 rated country bonds in early 2017was 2.54%. The riskfree rate in Indian Rupees is

a.The yield to maturity on the 10-year bond (6.40%)

b.The yield to maturity on the 10-year bond + Default spread (8.94%)

c.The yield to maturity on the 10-year bond - Default spread (3.86%)

d.None of the above