A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond yields 6.1%, and a 10-year corporate bond yields 9.4%. The market expects that inflation will average 2.9% over the next 10 years (IP10 = 2.9%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond? Round your answer to one decimal place.
yield on 5 year corporate bond=yield on 5 year Treasury
bond+yield on 10 year corporate bond-yield on 10 year Treasury
bond=4.8%+9.4%-6.1%=8.10%
A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond yields 6.1%, and a...
A 5-year Treasury bond has a 4.35% yield. A 10-year Treasury bond yields 6.65%, and a 10-year corporate bond yields 8.65%. The market expects that inflation will average 2.7% over the next 10 years (IP10 = 2.7%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities:...
A 5-year Treasury bond has a 3.75% yield. A 10-year Treasury bond yields 6.15%, and a 10-year corporate bond yields 8.55%. The market expects that inflation will average 3.9% over the next 10 years (IP10 = 3.9%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities:...
18. Problem 6.17 INTEREST RATE PREMIUMS A 5-year Treasury bond has a 3.35% yield. A 10-year Treasury bond yields 6.25%, and a 10-year corporate bond yields 9.55%. The market expects that inflation will average 3.15% over the next 10 years (IP10 = 3.15%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium...
Excel Online Structured Activity: Interest rate premiums A5-year Treasury bond has a 4.8 % yield . A 10- year Treasury bond yields 6.9 % , and a 10-year corporate bond yields 9.65 %. The market expects that inflation will average 3.45% over the next 10 years (IP10 3.45 % ) . Assume that there is no maturity nsk premium (MRP 0) and that the annual real risk-free rate, r, will remain constant over the next 10 years. (Hint: Remember that...
What is the yield on this 5-year corporate bond? A 5-year Treasury bond has a 4.45% yield. A 10-yeat Treasury hond yields 6.55%, and a 10-year corporate bond yields 9.1%. The market expects that inflation wilaverage 2.7% over the next 10 years (IP:u= 2.796). Assure that there is no maturity nsk premium (MRP - 0) and that the annual real risk-free rate, 1", will remain constant over the next 10 years. (Hint: Remember that the default nsk premium and the...
Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury band has a 3.5% yield. A 10-year Treasury bond yields 6.6%, and a 10-year corporate bond yields 9.7%. The market expects that Inflation will average 3.6% over the next 10 years (IP10 -3.6). Assume that there is no maturity risk premium (MRP-0) and that the annual real risk-free rate, , will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium...
LACel Une Juului cu ACLIVILY. Illel CSL lule Pielumns A 5-year Treasury bond has a 3.65% yield. A 10-year Treasury bond yields 6.15%, and a 10-year corporate bond yields 9.9%. The market expects that inflation will average 3% over the next 10 years (IP 10 = 3%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk...
Question 1 Video 0/10 Submit Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.05% yield. A 10-year Treasury bond yields 6.5%, and a 10-year corporate bond yields 9.05%. The market expects that infiation no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r* will averaqe 3.6% over the next 10 years (IP10 3.6%). Assume that there wll remaln constant over the next 10 years. (Hint: Remember that the default risk...
ACLIVIly. Interest rate premiums B Video Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.5% yield. A 10-year Treasury bond yields 6.1%, and a 10-year corporate bond yields 9.8%. The market expects that inflation will average 2.7% over the next 10 years (IP 10 = 2.7%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember...
Question 1 Video 0/10 Submit Excel Online Structured Activity: Interest rate premiums A 5-year Treasury bond has a 4.05% yield. A 10-year Treasury bond yields 6.5%, and a 10-year corporate bond yields 9.05%. The market expects that infiation no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r* will averaqe 3.6% over the next 10 years (IP10 3.6%). Assume that there wll remaln constant over the next 10 years. (Hint: Remember that the default risk...