Determinants of Interest Rate for Individual Securities A 2-year Treasury security currently earns 5.75 percent. Over the next two years, the real interest rate is expected to be 3.06 percent per year and the inflation premium is expected to be 2.06 percent per year. What is the maturity risk premium on the 2-year Treasury security?
1.15%
1.00%
.63%
5.12%
Maturity risk premium = 5.75% - Real interest rate 3.06% - inflation premium 2.06% = 5.75% - 3.06% - 2.06% = 0.63% Option C is the answer |
|
Determinants of Interest Rate for Individual Securities A 2-year Treasury security currently earns 5.75 percent. Over...
A 2-year Treasury security currently earns 1.71 percent. Over the next two years, the real risk-free rate is expected to be 1.15 percent per year and the inflation premium is expected to be 0.45 percent per year. Calculate the maturity risk premium on the 2-year Treasury security. (Round your answer to 2 decimal places.)
A 2-year Treasury security currently earns 2.14 percent. Over the next two years, the real risk-free rate is expected to be 1.50 percent per year and the inflation premium is expected to be 0.50 percent per year. Calculate the maturity risk premium on the 2-year Treasury security. (Round your answer to 2 decimal places.)
A 2-year Treasury security currently earns 1.75 percent. Over the next two years, the real risk-free rate is expected to be 1.25 percent per year and the inflation premium is expected to be 0.35 percent per year. Calculate the maturity risk premium on the 2-year Treasury security. (Round your answer to 2 decimal places.)
Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 4.30 percent. For all securities, the inflation risk premium is 3.30 percent and the real interest rate is 2.90 percent. The security's liquidity risk premium is 1.40 percent and maturity risk premium is 2.20 percent. The security has no special covenants. What is the security's equilibrium rate of return?
9.A 2-year Treasury security currently earns 4.63percent. Over the next 2 years, the real interest rate is expected to be 2.15percentper year and the inflation premium is expected to be 1.75percentper year. If you make the usual assumption that there is no liquidity risk on a Treasury security, what is the maturity risk premium on the 2-year Treasury security? A. morethan 2.00 percent B. more than 1.65 percentbut lessthan 2.00 percent C. more than 1.20 percentbut lessthan 1.65 percent D....
Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 4.70 percent. For all securities, the inflation risk premium is 3.45 percent and the real interest rate is 3.60 percent. The security's liquidity risk premium is 1.30 percent and maturity risk premium is 1.95 percent. The security has no special covenants. What is the security's equilibrium rate of return?
Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 4.90 percent. For all securities, the inflation risk premium is 3.90 percent and the real interest rate is 3.20 percent. The security's liquidity risk premium is 1.70 percent and maturity risk premium is 2.80 percent. The security has no special covenants. What is the security's equilibrium rate of return? Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity...
Find the required return for securities A and B. The real rate of interest is currently 2% *Please show work The real rate of interest is currently 296, find the required return for securities A and B Inflation maturity premium Time to Default riskLiquidity Maturity risk premium 1.596 2.5% premium 1.0% 1.596 premium 0.596 2.06 Security A 3 years 9.06 Security B 15 years 7.06
The Wall Street Journal reports that the rate on 3-year Treasury securities is 8.60 percent, and the 6-year Treasury rate is 8.65 percent. From discussions with your broker, you have determined that expected inflation premium is 3.90 percent next year, 4.15 percent in Year 2, and 4.35 percent in Year 3 and beyond. Further, you expect that real interest rates will be 4.20 percent annually for the foreseeable future. What is the maturity risk premium on the 6-year Treasury security?
1 Problem 6-1 Determinants of Interest Rates for Individual Securities (LG6-6) eBook A particular security's default risk premium is 4 percent. For all securities, the inflation risk premium is 3.85 percent and the real risk- free rate is 2.90 percent. The security's liquidity risk premium is 0.15 percent and maturity risk premium is 0.75 percent. The security has no special covenants. Calculate the security's equilibrium rate of return. (Round your answer to 2 decimal places.) Hint Print Rate of return...