Homework Answers
default risk premium = yield corporate bond - yield treasury bond = 6.6-4.75 = 1.85%
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D Question 1 5 pts Assume that a 3-year Treasury security yields 5.00%. Also assume that...
5 pts Assume that a 3-year Treasury security yields 3.70%. Also assume that the real risk-free...
5 pts Assume that a 3-year Treasury security yields 3.70%. Also assume that the real risk-free rate (r") is 0.75%, and inflation is expected to be 2 25% annually for the next years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the Star security? Round your answer to two decimal places. Your answer should be between 0.00 and 2.92, rounded to...
tegrity standards. Question 1 5 pts Assume that a 3-year Treasury security yields 5.10%. Also assume...
tegrity standards. Question 1 5 pts Assume that a 3-year Treasury security yields 5.10%. Also assume that the real risk-free ratę (r") is 0.75%, and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places Your answer should be between 0.00...
Assume that a 3-year Treasury security yields 5.20%. Also assume that the real risk-free rate (r')...
Assume that a 3-year Treasury security yields 5.20%. Also assume that the real risk-free rate (r') is 0.75%, and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places. 5 pts Your answer should be between 0.00 and 2.92 rounded to...
1) Assume that a 3-year treasury security yields 4.10%. Also assume that the real risk-free rate...
1) Assume that a 3-year treasury security yields 4.10%. Also assume that the real risk-free rate (r*) is 0.75% and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal insterest rate includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round answer to two decimal places. 2) a treasury bond that matures in 10 years has a yield of...
5 pts > Question 2 A Treasury bond that matures in 10 years has a yield...
5 pts > Question 2 A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 7.35%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no special characters. Question 3 5 pts Lennar Corporation's one-year bond...
Question 2 5 pts A Treasury bond that matures in 10 years has a yield of...
Question 2 5 pts A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6,95%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no special characters.
A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate...
A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6.70% Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no specia: characters
D Question 4 5 pts Sandino Corporation's 10 year, semiannual bond is currently selling at $850,...
D Question 4 5 pts Sandino Corporation's 10 year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nominal rate (YTM) of 7.12%. Given an annual maturity risk premium (MRP) of (t-1)*0.10%, the bond's liquidity premium (LP) of 0.40% and default risk premium (DRP) of 3.55%, what is the risk-free (TRF) rate? Your answer should be between 1.80 and 3.58, rounded to 2 decimal places, with no special characters. Question 5 5 pts Suppose...
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 4.8% 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:...
A 5-year Treasury bond has a 3.75% yield. A 10-year Treasury bond yields 6.15%, and a...
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:...
5 pts Assume that a 3-year Treasury security yields 3.70%. Also assume that the real risk-free rate (r") is 0.75%, and inflation is expected to be 2 25% annually for the next years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the Star security? Round your answer to two decimal places. Your answer should be between 0.00 and 2.92, rounded to...
tegrity standards. Question 1 5 pts Assume that a 3-year Treasury security yields 5.10%. Also assume that the real risk-free ratę (r") is 0.75%, and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places Your answer should be between 0.00...
Assume that a 3-year Treasury security yields 5.20%. Also assume that the real risk-free rate (r') is 0.75%, and inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places. 5 pts Your answer should be between 0.00 and 2.92 rounded to...
5 pts > Question 2 A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 7.35%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no special characters. Question 3 5 pts Lennar Corporation's one-year bond...
Question 2 5 pts A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6,95%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no special characters.
A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6.70% Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no specia: characters
D Question 4 5 pts Sandino Corporation's 10 year, semiannual bond is currently selling at $850, with a coupon rate of 5% and a nominal rate (YTM) of 7.12%. Given an annual maturity risk premium (MRP) of (t-1)*0.10%, the bond's liquidity premium (LP) of 0.40% and default risk premium (DRP) of 3.55%, what is the risk-free (TRF) rate? Your answer should be between 1.80 and 3.58, rounded to 2 decimal places, with no special characters. Question 5 5 pts Suppose...
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