Answer:
6%
Explanation:
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed. The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.
Solution
interest rate on 3-year bond
Interest rate = [{(1 + 3%) × (1 + 5%) × (1 + 8%)} ^ (1 / 3) - 1] + 0.75%
Interest rate = [(1.16802 ^ 0.33) - 1] + 0.75%
Interest rate = (1.0525- 1) + 0.75%
Interest rate = 0.0525 + 0.0075%
Interest rate = 0.06 OR 6%
