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Question 4 Sandino Corporations 10-year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nomina
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Answer #1

YTM = rRF + MRP + LP + DRP

7.12% = rRF + [(10-1)*0.10%] + 0.40% + 3.20%

7.12% = rRF + 0.90% + 3.60%

7.12% = rRF + 4.50%

rRF = 7.12% - 4.50% = 2.62%

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