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Questions -
Q1. A particular security's equilibrium rate of return is 8 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.5 percent. The security's liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. The security has no special covenants. Calculate the security's default risk premium.
Q2. You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills page 55 are currently earning 3.25 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:
Real risk-free rate = 2.25%
Default risk premium = 1.15%
Liquidity risk premium = 0.50%
Maturity risk premium = 1.75%
a. What is the inflation premium?
b. What is the fair interest rate on Moore Corporation 30-year bonds?
Mary, a U.S. citizen is the sole shareholder of CanCo, a Canadian corporation. During its first year of operations, CanCo earns $14 million of foreign-source taxable income, pays $6million of Canadian income taxes, and distributes a $2 million divide..
Which the major objectives of any budget system are to? Define responsibility centres, provide framework for performance evaluation, and promote communication
Calculate the incremental profit or loss associated with accepting the New England Investments group and what was the opportunity cost of accepting the New England Investments group?
Look over Maslow's hierarchy of needs and try to determine where you are right now on the hierarchy. What needs of yours are not being met? How could a company go about meeting those needs and thus motivate you to work more effectively?
Gaijin Corporation was formed two years ago to manufacture tractor parts. It has been profitable and is growing rapidly. It currently has 150 shareholders and 90 employees; most of the employees own at least a few shares of Gaijin's stock. Explain wh..
higher than the net operating income under variable costing-lower than the net operating income under variable costing.
FNSACC301 – Process Financial Transactions and Extract Financial Reports - prepare and process the financial and business documents of Brightspring Traders
What are main ethical challenges you believe to be facing the accounting profession? Why do you think the general public believes that the practice of accounting does not involve any major ethical considerations?
How decide sources of finance and capital structure a company? In other words for financing decision how does a company decides about the quantity
An individual taxpayer reports a $19,000 NOL in 2016. To which tax year can this NOL be apply? how would your answer change if taxpayer were C Corporation, rather than individual?
What are lines of credit? From the viewpoint of a short-term creditor, why do lines of credit increase a company's liquidity?How are the unused portions
The landscaping is expected to have a 20-year useful life and no residual value. Prepare the journal entries at December 31, 2011 to correct the errors (ignore income taxes).
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