Homework Answers
4. The yield on Johnson corporation 5 - year bond is :
Re = Real risk free rate + inflation premium + default risk premium + liquidity premium + maturity premium
= 2.8 + 1 + 0.85 + 1.25 + ( 5-1 ) * 0.1%
= 5.9% + 0.4%
=6.3%
So, the correct option is option D.
Add Answer to:
4. Johnson Corporation has 5-year bonds. Inflation premium (IP) on a 5 year bond is 1.00x....
6. Moore Corporation has 6-year bonds. Inflation premium (IP) on a 6year bond is 1.00%. The...
6. Moore Corporation has 6-year bonds. Inflation premium (IP) on a 6year bond is 1.00%. The real risk-free rate is r* = 2.80%, the default risk premium for Moore's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Moore's bonds is LP= 1.20%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) x 0.1%, where t = number of years to maturity. What is the yield on...
Can you please help me solve these problems. The subject is Principles of Finances Chapter 6...
Can you please help me solve these problems. The
subject is Principles of Finances Chapter 6 Interest Rates.
a) THIS IS TRUE b) THIS IS FALSE 2. Johnson Corporation's 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* 2.80%, the default risk premium for Johnson's bonds is DRPs 0.85% versus zero for T-bonds, the liquidity premium on Johnson's bonds is LP 1.25%, and the maturity risk premium for all bonds is found with the...
1. Blazio Corporation's 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.75%. The real risk-free rate...
1. Blazio Corporation's 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* = 2.80%, the default risk premium for Blazio's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Blazio's bonds is LP = 1.10%, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1) x 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on...
Higgins’ 5-year bonds yield 5.10% and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5-year bonds is IP = 1.50%, the liquidity premium for Higgins' bon...
Higgins’ 5-year bonds yield 5.10% and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5-year bonds is IP = 1.50%, the liquidity premium for Higgins' bonds is LP = 0.5% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1) 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Higgins' bonds?
2.1.40% b. .. 1 1 5. Le Corporation's 5-year bonds yield 6.30%, and 5-year T-bonds yield 4.80%. The real risk-free...
2.1.40% b. .. 1 1 5. Le Corporation's 5-year bonds yield 6.30%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r = 2.7570, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Le's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 10.1%, where t =number of years to maturity. What is the liquidity premium...
Crockett Corporation's 5-year bonds yield 6.35%, and 5-year T-bonds yield 4.45%. The real risk-free rate is...
Crockett Corporation's 5-year bonds yield 6.35%, and 5-year T-bonds yield 4.45%. The real risk-free rate is r* = 2.80%, the default risk premium for Crockett's bonds is DRP = 1.00% versus zero for T-bonds, the liquidity premium on Crockett's bonds is LP = 0.90% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1) × 0.1%, where t = number of years to maturity. What inflation premium (IP)...
Niendorf Corporation's 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.80%....continues
Niendorf Corporation's 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP =1.65%, the default risk premium for Niendorf's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP= (t - 1) ´ 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Niendorf's bonds?
1. 1 in Nation is expected to be relatively low, then Interest rates will tend to...
1. 1 in Nation is expected to be relatively low, then Interest rates will tend to be relatively high, other things held constant 2. True b. False 2. Which of the following statements is CORRECT? 2. If the maturity risk premium (MRP) is greater than rero, the Treasury bond yield curve must be upward sloping b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. c. If inflation is expected to decrease in...
2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free...
2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Keys' bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t-1)x0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Black Sheep's bonds?
2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r...
2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Keys' bonds is LP=0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t-1)x0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Black Sheep's bonds?
6. Moore Corporation has 6-year bonds. Inflation premium (IP) on a 6year bond is 1.00%. The real risk-free rate is r* = 2.80%, the default risk premium for Moore's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Moore's bonds is LP= 1.20%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) x 0.1%, where t = number of years to maturity. What is the yield on...
Can you please help me solve these problems. The
subject is Principles of Finances Chapter 6 Interest Rates.
a) THIS IS TRUE b) THIS IS FALSE 2. Johnson Corporation's 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* 2.80%, the default risk premium for Johnson's bonds is DRPs 0.85% versus zero for T-bonds, the liquidity premium on Johnson's bonds is LP 1.25%, and the maturity risk premium for all bonds is found with the...
2.1.40% b. .. 1 1 5. Le Corporation's 5-year bonds yield 6.30%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r = 2.7570, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Le's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 10.1%, where t =number of years to maturity. What is the liquidity premium...
1. 1 in Nation is expected to be relatively low, then Interest rates will tend to be relatively high, other things held constant 2. True b. False 2. Which of the following statements is CORRECT? 2. If the maturity risk premium (MRP) is greater than rero, the Treasury bond yield curve must be upward sloping b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. c. If inflation is expected to decrease in...
2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Keys' bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t-1)x0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Black Sheep's bonds?
2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Keys' bonds is LP=0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t-1)x0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Black Sheep's bonds?
Most questions answered within 3 hours.
-
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 10 minutes ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 25 minutes ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 30 minutes ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 33 minutes ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 33 minutes ago -
Why are polymers not typically casted into products?
asked 50 minutes ago -
When rolling a die 129 times, what is the probability of rolling
a 6 no more...
asked 1 hour ago -
4. A call option currently sells for $7.75. It has a strike
price of $85 and...
asked 56 minutes ago -
1.
You need to prepare 10.0 liters of an acid aqueous solution with a
pH of...
asked 59 minutes ago -
Along an aggregate supply curve, if the level of output is less
than the natural level...
asked 59 minutes ago -
By 2025, annual consumption in emerging markets will total $30
trillion and contribute more than ________...
asked 1 hour ago -
At what point does reformation cease to be a viable option for
those who are oppressed...
asked 1 hour ago