User Account

All Pages

Determining the real risk-free rate

Assignment Help Finance Basics
Reference no: EM131402110

Real Risk-Free Rate

You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.4%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:

Inflation premium = 3%

Liquidity premium = 1%

Maturity risk premium = 2%

Default risk premium = 2.45%

On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places.

Reference no: EM131402110

Questions Cloud

Average accounts payable balance : ABC Company has annual sales of $400,000 and cost of goods sold of $153,422. The accounts payable period is 59.91 days. What is the average accounts payable balance?
Firm effective cost of borrowing : ABC Company has an average collection period of 28 days and factors all of its receivables immediately at a 2.3 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?
How technology in the laboratory has been used medical care : Your initial outline for your course project paper is due this module. Prepare a 1-2 page document containing your outline. Your outline will be the skeleton from which you will write your project. Your outline should contain an idea for your intr..
Growth factor for the entire week : If the Dow Jones Industrial Average increases by 1.2% on Monday, by 0.7% on Tuesday, 2.4% on Wednesday, 1.8% on Thursday, and 0.2% on Friday, what is the growth factor for the entire week?
Determining the real risk-free rate : You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.4%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:
Description of the communicable disease : Description of the communicable disease (causes, symptoms, mode of transmission, complications, treatment) and the demographic of interest (mortality, morbidity, incidence, and prevalence).Describe the determinants of health and explain how those ..
Determining the amount of the collection float : As of this morning, your firm had a ledger balance of $3,532 with no outstanding deposits or checks. Today, your firm deposited 4 checks in the amount of $274 each and wrote a check in the amount of $701. What is the amount of the collection float..
What is the purpose genetic engineering of domestic animals : What is the purpose genetic engineering of crop plants and domestic animals? Briefly explain how GMOs are created. What foods in your supermarket contain GMOs? Are foods that contain GMOs safe for human consumption?
Determining the inventory turnover : ABC Corporation currently has an inventory turnover of 11.84, a payables turnover of 14.76, and a receivables turnover of 10.84. How many days are in the cash cycle?

Reviews

Write a Review

Finance Basics Questions & Answers

  Computing the yield to maturity

Convenient Stores has a bond issue with 10 years to maturity, $1,000 face value, 8% coupon interest compounded semiannually, that are callable in 5 years at $1050. The bonds currently sell in the market for $1,100. What is the yield to maturity?

  What is component depreciation and when must it be used

What is component depreciation, and when must it be used? What is revaluation of plant assets? When should revaluation be applied? Explain how IFRS defines a contingent liability and provide an example.

  Determine the real risk-free rate of return

You read in the Wall Street Journal that thirty day T-bills are currently yielding 5.55. your brother-in-law, a broker at Safe and Sound Securities, has given you following estimates of current interest rate premiums;

  A commodity linked bond is issued with an embedded call

a commodity linked bond is issued with an embedded call option. the current commodity price is 110 as is the exercise

  A 6-year bond which pays 8 percent interest semiannually

a 6-year bond which pays 8 percent interest semiannually sells at par 1000. another 6-year bond of equal risk pays 8

  Explain why an american option is always worth at least as

explain why an american option is always worth at least as much as its intrinsic

  People claim that playing the stock market

Many people claim that playing the stock market is like gambling. How is this true or not true? What should be one's approach to the stock market?

  The organizational set-up for the purpose

(a) A newly opened bank with paid-up capital of Rs. 500/- crores and deposits amounting to Rs. 500/- crores wants to take up treasury operations. Outline the organizational set-up for the purpose.

  What is the project discounted payback

Project K costs $45,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 8%. What is the project's discounted payback? Round your answer to two decimal places.

  Find statement of cash flow for a firm of your choosing

Find statement of cash flow for a firm of your choosing and report the cash flow ratios. Please report and discuss 3 years of ratios for the three ratios related to debt and dividends but only the current year's cash flows per share.

  What change has benefited the consumer most

What change has benefited the consumer most? What new risks are banks subjected to given the greater use of technology within the industry? Utilize information provided in the readings and from your own experiences in your response.

  Scenario make synthetically created option more expensive

Consider the following two scenarios: - Stock price increases steadily from $20 to $35 during the life of the option;- Stock price oscillates wildly, ending up at $35. - Which scenario would make the synthetically created option more expensive?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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