A zero-coupon bond has a beta of 0.3 and promises to pay $1000 next year with a probability of 95%. If the bond defaults, it will pay nothing. One -year Treasury securities are yielding 2%, and the equity premium is 5%. What is the default premium on this bond?
A. 5.4%
B. 3.5%
C. 3.0%
D. 1.5%
d.1.5%.
default premium = beta of the bond * equity premium
=>0.30 * 5%
=>1.50%.
A zero-coupon bond has a beta of 0.3 and promises to pay $1000 next year with...
A zero-coupon bond has a beta of 0.3 and promises to pay $1000 next year with a probability of 95%. If the bond defaults, it will pay nothing. One -year Treasury securities are yielding 2%, and the equity premium is 5%. What is the time premium for this bond investment?
A zero-coupon bond has a beta of 0.3 and promises to pay $1000 next year with a probability of 95%. If the bond defaults, it will pay nothing. One -year Treasury securities are yielding 2%, and the equity premium is 5%. What is the promised rate of return on this bond? Round your answer to the nearest tenth of a percent. 6.9% 8.0% 8.2% 8.9%
A zero-coupon bond has a beta of 0.7 and promises to pay $1000 next year with a probability of 90%. If the bond defaults, it will pay nothing. One -year Treasury securities are yielding 1.7%, and the equity premium is 5%. What is the promised rate of return on this bond? Round your answer to the nearest tenth of a percent.
A zero-coupon bond with a market-beta of 0.2 promises to pay $1,000 in the first year. However, it may default and pay nothing with probability 0.1%. If the risk-free rate is 5.3%, the equity premium is 6.5%, and the CAPM is correct, what would be the bond price today?________________ Carry out calculations to at least 4 decimal places. Enter percentages as whole numbers. Example: 3.03% should be entered as 3.03. Do not include commas or dollar signs in numerical answers.
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