The corporate bonds default risk premium is what

Assignment Help Financial Management
Reference no: EM132032463

A Treasury bond that matures in 10 years has a yield of 6 percentage. A 10-year corporate bond has a yield of 8 percentage.

Assume that the liquidity premium on the corporate bond is 0.5 percentage. What is the default risk premium on the corporate bond

Reference no: EM132032463

Questions Cloud

What is the expected price of purchase : Use the expected sale price, and the expected purchase price to calculate the premium of the option. Remember to take the present value.
In which country would the treasurer want to invest : The interest rate in Great Britian is .22 percent per month. The spot exchange rate is 63 pounds and the three month forward rate is 64 pounds.
How much would the investment be worth after three months : The treasurer of a major U.S. firm has $28 million to invest for three months. The interest rate in the United States is .45 percent per month.
What is the exact real rate : Treasury bills are currently paying 6 percent and the inflation rate is 3 percent.
The corporate bonds default risk premium is what : A Treasury bond that matures in 10 years has a yield of 6 percentage. A 10-year corporate bond has a yield of 8 percentage.
What percent of wealth would a risk-neutral investor : A treasury bill pays a 6% rate of return. The market portfolio pays 15% with a probability of 20% or 3.875% with a probability of 80%.
What is this corporations wacc : Transforms You Now (TYN) develops protein infused products that are sold exclusively through the chain's stores in major markets.
What was the percent return : a Treasury bond bought at the beginning of the year for $1,064 pays $48 in interest payments during the year, ending year valued at $1,095.
Compute the products target cost : Treadwell Electronics, Inc., produces circuit boards for electronic devices that are made by more than a dozen customers.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the NPV of the project and Internal rate of return

AAI is in the 35 percent marginal tax bracket and has a required return on all its projects of 18 percent. What is the NPV of the project?

  Compute percentage total return

Suppose a stock had an initial price of $77 per share, paid a dividend of $1.3 per share during the year, Compute the percentage total return.

  What is the internal rate of return for investment

An apartment building in your neighborhood is for sale for $140,000. The building has four units, which are rented at $500 per month each. The tenants have long-term leases that expire in 5 years. Maintenance and other expenses for care and upkeep ar..

  Planning to save for retirement-withdrawal period

You are planning to save for retirement over the next 25 years. To do this, you will invest $760 a month in a stock account and $360 a month in a bond account. The return of the stock account is expected to be 9.6 percent, and the bond account will p..

  Price of put option necessary to guarantee your sales price

You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,260,000. Over the past five years, the price of land in the area has increased 8 percent per year, with an annual standard deviation of 37 percent. W..

  What is the pretax cost of debt and cost of equity

If Jungle's cost of equity is 16.5 percent, what is the pretax cost of debt? what is the cost of equity?

  The risky portfolio and the risk-free asset

A portfolio has an expected rate of return of 14% and a standard deviation of 22%. The risk-free rate is 4%. An investor has the following utility function:. U = E(r)-1/2(A)σ2 Which value of A makes this investor indifferent between the risky portfol..

  What are the expected cash flows for healthy water project

Cascade Water Company (CWC) currently has 30,000,000 shares of common stock outstanding that trade at a price of $42 per share. CWC also has 500,000 bonds outstanding that currently trade at $923.38 each. CWC has no preferred stock outstanding and th..

  What day does this stock begin trading exdividend

What day does this stock begin trading exdividend? What is the last day that Kathy can purchase the stock (trade date) and still receive the dividend?

  Debt financing and stock financing alternatives

Calculate earnings per share under both the debt financing and the stock financing alternatives at each possible level of sales.

  Differ for a domestic firm and a multinational firm

Discuss how the following aspects differ for a domestic firm and a multinational firm:

  The optimal hedge ratio for the six month contract on wheat

Suppose the scenario that the standard deviation of semiannual changes in the price of wheat is $.79, the standard deviation of changes.

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