What does statement imply about market price of risk

Assignment Help Finance Basics

Reference no: EM131241015

‘‘The expected future value of an interest rate in a risk-neutral world is greater than it is in the real world.''

What does this statement imply about the market price of risk for (a) an interest rate and (b) a bond price.

Do you think the statement is likely to be true? Give reasons.

Reference no: EM131241015

Questions Cloud

What is the impact of the tax on welfare in this market : The supply of candy is given by Qs = 20,000P where Qs is bags of candy supplied per year and P is the price per bag. The demand for candy is given by Qd = 150,000 – 30,000P. Assuming that candy is sold in a competitive market, what is the equilibrium..

What is process for x in the traditional risk neutral world : Suppose further that the market price of risk for x is λ. -What is the process for x in the traditional risk-neutral world?

What is the value of the unlevered beta : The beta of the stock is 1.25, the marginal tax rate of the firm is 36%, and the debt equity ratio is 0.30. What is the value of the unlevered beta

Determine the moment needed at the base of 30-m-tall : Determine the moment needed at the base of 30-m-tall, 0.12-m-diameter flag pole to keep it in place in a 20 m/s wind.

What does statement imply about market price of risk : ‘‘The expected future value of an interest rate in a risk-neutral world is greater than it is in the real world.'' - What does this statement imply about the market price of risk for (a) an interest rate and (b) a bond price.

Faster growth than in the command economic system : Private ownership in the market system is believed to enhance innovation and faster growth than in the command economic system. With examples, explain why or why not this statement is true.

Compare the social efficiency of three possible outcomes : Two firms are ordered by the federal government to reduce their pollution levels. Compare the social efficiency of three possible outcomes: require both firms to reduce pollution by the same amount; charge a common tax per unit of pollution;

Discuss in detail the purpose and importance of product : Should the exculpatory clause in the National Office Services contract with Shine affect the outcome of the lawsuit, and why or why not? Analyze and discuss in detail the purpose and importance of product liability law in Society.

Why a partnership agreement may need features : Discuss why a partnership agreement may need features in addition to the income and loss- sharing ratio. Discuss the arguments in favor of recording salary and bonus allowances to partners as expenses included in computing net income.

User Account

All Pages