Determine the liquidity premium for the corporate bond

Assignment Help Finance Basics
Reference no: EM13289910

A ten-year U.S. Treasury bond has a 3.5 percent interest rate, while a same maturity corporate bond has a 5.25 percent interest rate. Real interest rates and inflation rate expectations would be the same for the two bonds. If a default risk premium of 1.50 percentage points is estimated for the corporate bond, determine the liquidity premium for the corporate bond.

Reference no: EM13289910

Questions Cloud

Determine what is the sign of the realpart of the sum : A complex number with a phase between 90° and 180°(in the 2nd quadrant) is added to a second complexnumber with a phase between -90° and -180° (inthe 3rd quadrant). What is the sign of the realpart of this sum
What is the acceleration due to gravity on mars : Suppose an astronaut has landed on Mars. Fully equipped, the astronaut has a mass of 125 kg, What is the acceleration due to gravity on Mars
What is the expect annual inflation rate : A one-year U.S. Treasury security has a nominal interest rate of 2.25 percent. If the expected real rate of interest is 1.5 percent what is the expect annual inflation rate?
What is the force of gravity between two cars : What is the force of gravity between two 1000-kg cars separated by a distance of 25m on a interstate
Determine the liquidity premium for the corporate bond : If a default risk premium of 1.50 percentage points is estimated for the corporate bond, determine the liquidity premium for the corporate bond.
What additional force is needed for the to remain stationary : A horizontal force of 250 N is applied to a stationary wooden box in one direction, What additional force is needed for the box to remain stationary
What was the amount of personal saving last year : Personal income amounted to $17 million last year. Personal current taxes amounted to $4 million and personal outlays for consumption expenditures, nonmortgage interest, and so forth were $12 million.
Calculate the load voltage-load power and the efficiency : Calculate the load voltage, the load power, and the efficiency of the transmission system under the following schemes. a. 4:1 transformer at generator b. 4:1 transformer to load c. 1:4 transformer at the generator and a 16:1 transformer at the loa..
Compute the magnitude of the charge on each sphere : Two small metallic spheres, each of mass m = 0.25 g, are suspended as pendulums by light strings from a common point as, compute the magnitude of the charge on each sphere

Reviews

Write a Review

Finance Basics Questions & Answers

  How many shares of stock will be outstanding

Theodore's has common stock outstanding at a price of $26 a share. The total market value of the equity is $429,000. How many shares of stock will be outstanding if the firm does a 2-for-5 reverse stock split?

  What are the retained earn

In addition, the company had an interest expense of $4,256, and a tax rate of 43%. The company paid$9,026 as dividends. If the retained earnings is 2006 were $56,533, what are the retained earnings in 2007?

  Calculate horizon value at the end of year 5

Calculate horizon value at the end of year 5 (round to the nearest dollar). 1. $91 2. $101 3. $95 4. $149 5. none of the above.

  Construct hospitals base case projected p&l statement

Corporation, a not-for-profit acute care facility has this cost structure for its inpatient services: The hospital expects to have a patient load of 15,000 inpatient days next year.

  Solve discion making question

Susan Crossing buy a used Ford Focus for $8,000. Since purchasing car, she has spent the following funds on parts and labor:

  Evaluate the pros and cons of offshore outsourcing

Evaluate the pros and cons of offshore outsourcing for the countries involved. What happens to jobs, resource utilization, knowledge, experience, and expertise of the countries involved with outsourcing? Does society at large benefit?

  Computation of value of the stock using constant growth

computation of value of the stock using constant growth model where The current risk-free rate of return is 5% and the market risk premium is 8%

  What was its return on invested capital

Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $2,300. What was its return on invested capital (ROIC)?

  What would be the yearly earnings for a person

what would be the yearly earnings for a person with $14,300 in savings at an annual interest rate of 14.5 percent?

  Determine market capitalization

In March 2005, General Electric had a book value of equity of $113 billion, 10.6 billion shares outstanding, and a market price of $36 per share.

  Analogies used to describe the theory of concepts

Analogies used to describe the theory of concepts and Cite the pages in the book where you found this analogy

  Determine the required sales volume

Senbet Ventures is planniing starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost for each unit; the VC/unit is estimated to be 2.50;

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