Computation of yield on bond with given data

Assignment Help Finance Basics

Reference no: EM1316446

Drongo Corporation's 4-year bonds currently yield 7.4 percent. The real risk-free rate of interest, k*, is 2.7 percent and is assumed to be constant. The maturity risk premium (MRP) is estimated to be 0.1%(t - 1), where t is equal to the time to maturity. The default risk and liquidity premiums for this company's bonds total 0.9 percent and are believed to be the same for all bonds issued by this company. If the average inflation rate is expected to be 5 percent for years 5, 6, and 7, what is the yield on a 7-year bond for Drongo Corporation?

Reference no: EM1316446

Questions Cloud

Demand curve for stadium seats : The owner of the Los Angeles Dodgers has commissioned a study that showed the demand by fans for stadium seats (per playing date) to be P = 22 - 0.2Q-How much revenue does the owner make at the current price?

Find the probability using hypergeometric distribution : Find the probability that 4 of the 5 committee members belong to a union.Find the probability using hypergeometric distribution.

Increasing and decreasing intervals : Increasing and decreasing intervals.

Length of stay of workers at the company differs : Can we compute the mean length of stay of workers at the company differs from the mean length of stay at that dangerous industry.

Computation of yield on bond with given data : Computation of yield on bond with given data and what is the yield on a 7-year bond for Drongo Corporation

Stating null and alternative hypotheses : State the null and the alternative hypotheses. Using the p-value approach, test to determine whether or not the mean age of all employees is significantly more than 40 years.

Deciding about factory lease and quantity of output : Suppose the firm decided to lease the large factory, and has put down a non-refundable deposit of 4,000 for that factory. Provide a recommendation concerning which factory firm should lease, and the number of boxes of chalk it should produce.

The ceo of the business has nothing better to do : The CEO of the business has nothing better to do wheras measured the temperatures of 26 department managers 1 to 4 times every day to get a total of 123 measurements.

Calculating the first derivative and critical point : Calculating the first derivative and critical point.

User Account

All Pages