The real risk-free rate is 3.71%, inflation is expected to be 3.21% this year, and the maturity risk premium is 0.7% while the liquidity premium and default risk premium is zero. IBM stock has a risk premium of 0.9%. What is the equilibrium rate of return on a 10-year Treasury bond?
Please round your answer to the fourth decimal. e.g. if your answer is 1.11%, you should input 0.0111.
In order to calculate the rate of return, nominal risk free rate should be known.
Nominal risk free rate is calculated below:
The equilibrium rate of return is calculated below:
The real risk-free rate is 3.71%, inflation is expected to be 3.21% this year, and the...
The real risk-free rate is 3.71%, inflation is expected to be 3.21% this year, and the maturity risk premium is 0.7% while the liquidity premium and default risk premium is zero. IBM stock has a risk premium of 0.9%. What is the equilibrium rate of return on a 10-year Treasury bond?
The real risk-free rate is 3.71%, inflation is expected to be 3.21% this year, and the maturity risk premium is 0.7% while the liquidity premium and default risk premium is zero. IBM stock has a risk premium of 0.9%. What is the equilibrium rate of return on a 10-year Treasury bond?
The real risk-free rate, r*, is 1.5%. Inflation is expected to average 1.2% a year for the next 4 years, after which time inflation is expected to average 4.3% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 9.5%, which includes a liquidity premium of 0.7%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places. %
The real risk-free rate, r*, is 1.95%. Inflation is expected to average 2.9% a year for the next 4 years, after which time inflation is expected to average 3.75% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 8.95%, which includes a liquidity premium of 0.9%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.
The real risk-free rate, r*, is 1.8%. Inflation is expected to average 3.5% a year for the next 4 years, after which time inflation is expected to average 4.65% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 9.15%, which includes a liquidity premium of 0.9%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.
Suppose the real risk free rate : 4.205. Expected inflation - 1.10 Maturity riak premium, P = 0.10(E) where to the years to maturity. Calculate for the return of year Treasury security? a. 7.50 b. 7.80 c. 7.701 13. Pirms five year bonds. yield -6.201; Five year Treasury bonds yield - 4.401. Real risk-free rate, r. - 2.51. Expected inflation for five yar bonds, IP - 1.501. Liquidity premium for AA bond, LP - 0.51 and zero for Treasury bonds....
The real risk-free rate, r*, is 3%. Inflation is expected to average 2.75% a year for the next 4 years, after which time inflation is expected to average 4.05% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 9.15%, which includes a liquidity premium of 0.8%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.
the real risk-free rate is 3%. inflation is expected to be 2% a year for 3 years, and then 4% a year thereafter. The maturity risk premium is 0.1(t-1)%, where t equals the maturity of the bond. That is, the maturity risk premium on a 5-year bond is 0.004 or 4%. A 5-year corporate bond has a yield of 8.4%. What is the yield on a 7-year corporate bond that has the same default risk and liquidity premiums as the...
The real risk-free rate is 0.25%. Inflation is expected to average 1.0% a year for the next 2 years, after which time inflation is expected to average 2.00% a year. Assume that there is no maturity risk premium. A 16-year corporate bond has a yield of 16.0%, which includes a liquidity premium of 0.50%. What is its default risk premium? 13.875% 14.250% 13.375% 13.250%
The real risk-free rate of interest is expected to remain constant at 2.5%. The inflation rate is expected to be 3% (Year 1), 4.2% (Year 2), and 4.6% thereafter. The maturity risk premium (MRP) is equal to 0.079(t-1)%, where t-the bond's maturity. A 4-year corporate bond yields 8%, what is the yield on a 10-year corporate bond that has the default risk and liquidity premiums 1% higher than that of the 4-year corporate bond? The real risk-free rate of interest...