Participating Notes (guide to study for Quiz over Chapter 6) 4) Kelly Inc's 5-year bonds yield...
De to study for Quiz over Chapter 6) 4) Kelly Ine's 5-year bonds yield 8.50% and 5-year T-bonds yield 4.90%. The real risk-free rate is = 2.7%, the default risk premium for Kelly's bonds is DRP=0.40%, the liquidity premium on Kellys bonds 2.24 versus zero on T-bonds, and the inflation premium (LP) is 1.5%. What is the maturity risk premium (MAP) on the 5-year bonds?
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?
Problem 2: (2 points) Keys Corporation's 5-year bonds yield 6.50%, and 5-year T-notes yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5 years bonds is IP = 1.50%, the liquidity premium for Keys' bonds is LP = 0.5% versus zero for T-notes, 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...
Problem 4 FIN300 Corporation's 10-year bonds yield 8.00%, and 10-year T-bonds yield 6%. The real risk-free rate is r* 3.0%, the inflation premium for 5-year bonds is IP = 1.95%, the liquidity premium for FIN300's bonds is LP = 1% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP (-1) x 0.07%, where t-number of years to maturity. What is the default risk premium (DRP) on FIN300's bonds?
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. 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?
2.1.40% 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...
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?
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)...
20. Suppose 10-year corporate bonds have a yield of 8%, and 10-year T-bonds yield 5%. The real risk-free rate is r* 1.80%, the inflation premium for 10-year bonds is IP = 2%, the default risk premium for corporate bonds is DRP -1% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP -(t-1) * 0.1%, wheret - number of years to maturity. What is the liquidity premium (LP) on corporate bonds?