About the liquidity premium

Assignment Help Financial Management
Reference no: EM131057024

Liquidity Premium

A. accounts for the fact that longer-term bonds experience greater price reaction to interest rate changes than short term bonds

B. ability to convert as asset into cash on short notice and reasonably capture the amount initially invested

C. financial assets have lower liquidity premiums than real assets

D. is a component of the quoted risk-free rate of return.

Reference no: EM131057024

Questions Cloud

Explain how stock dividends or stock splits : Most firms would like to have their stock selling at a high P/E ratio, and they would also like to have a large number of different shareholders. Explain how stock dividends or stock splits might help achieve these goals?
Complete combustion of liquid benzene : The complete combustion of liquid benzene is represented by the equation:
Determine the commercial success or failure of a product : Effective marketing can determine the commercial success or failure of a product or service. In order to be effective, marketing strategies and campaigns must develop a competitive edge in order to keep their product or service in the mind of the ..
Identifies areas of international business law : Identifies areas of international business law and practices and the information needs of your company - how ethics and culture affect transactions with your international business partners and the strategies you should consider when entering those..
About the liquidity premium : Liquidity Premium
Calculate the amortized fees and expenses for this loan : Suppose you take a 26-year mortgage of $210000. The annual interest rate is 4%, and the annual APR is 5%. Loan payments are made annually. Calculate the amortized fees and expenses for this loan (in dollars, provide your answer with $1 precision).
Balanced equation for reaction : A voltaic cell is prepared in which copper metal is oxidized to Cu(II), and silver ion is reduced to silver metal. Which of the following represents the correctly balanced equation for this reaction?
The long-run equilibrium price : A competitive industry is in long-run equilibrium. Market demand is linear, p = a - bQ, where a> 0, b > 0, and Q is market output. Each firm in the industry has the same technology with cost function, c(q) =k2 + q2.
Explain the problems associated with inflation : Explain what is meant by inflation and deflation, clearly distinguish between the two terms. Explain the problems associated with inflation.

Reviews

Write a Review

Financial Management Questions & Answers

  Forms of organizations is easiest to form-corporation

Which of the following forms of organizations is the easiest to form? Which of the following is a strength of a corporation? The 2002 law that established the Public Company Accounting Oversight Board (PCAOB) was called ________.

  What is the cost of equity

Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,700. The company has $3,200 in bonds outstanding that have a 6 percent coupon and pay interest a..

  Invest in government securities-buy and sell federal funds

Banks and other depository institutions make loans, invest in government securities, buy and sell federal funds, and accept deposits with a wide spectrum of maturities and with many payable on demand. Briefly discuss the risks facing these institutio..

  Why is this figure different from its accounting income

During 2011, Lele Design earned net income of $250,000. The firm neither bought nor sold any capital assets. The book value of its assets declined by the year’s depreciation charge of $200,000. The firm’s operating cash flow for the year was $450,000..

  Fundamental analysis or technical analysis

When valuing stocks (and in particular, deciding what stocks to buy and at what price), two basic methodologies can be employed- fundamental analysis and technical analysis. In relation to investments in equity, argue from a Shari'ah perspective, whi..

  Regarding evaluating npv estimates and break-even analysis

Which of the following is NOT accurate regarding evaluating NPV estimates and break-even analysis?

  Compute the present value of a growing perpetuity

Calculate the present value of a growing perpetuity that makes one payment per year with the first payment, made in exactly one year from now, being $1000. Let the payments grow at an annual rate of 9.9 percent (g = .099).

  Taxes deducted from my paycheck

As an independent contractor (Form 1099), am I better off becoming a w2 employee and having State/SS taxes deducted from my paycheck? Or paying the taxes that do not get deducted out of my biweekly paychecks at the end of the year or specific paying ..

  Prepare an amortization schedule for a three-year loan

Prepare an amortization schedule for a three-year loan of $111,000. The interest rate is 10 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan?

  Metropolis health system about their ambulance situation

Metropolis Health System has to do something about their ambulance situation. They have to (1) buy a new ambulance, (2) lease a new one, or (3) renovate an existing ambulance that MHS already owns. How much more information should Rob have before he ..

  Rate of return on this investment

Martin's Inc. is expected to pay annual dividends of $2.50 a share for the next three years. After that, dividends are expected to increase by 3% annually. what is the current value of this stock you if you require 9% rate of return on this investmen..

  What is your bonds rate of return over the year

You buy a(n) 6.6% coupon, 7-year maturity bond for $964. A year later, the bond price is $1,104. Assume coupons are paid once a year and the face value is $1,000. What is your bond's rate of return over the year?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd