What is real risk-free rate of return

Assignment Help Financial Management
Reference no: EM131867721

Real Risk-Free Rate You read in The Wall Street Journal that 30-day T-bills are currently yielding 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 = 2.5% Liquidity premium = 0.7% Maturity risk premium = 1.55% Default risk premium = 2.15% On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places. %

Reference no: EM131867721

Questions Cloud

Developed plan which will provide for future municipal water : A city has developed a plan which will provide for future municipal water needs. which alternative should be chosen?
What is the expected utility bill for the property : If utilities are $2.10 per square foot and 40% fixed, what is the expected utility bill for the property?
What is the risk of firm : Consider an oil drilling firm planning to sell 10,000 barrels of oil in February, 2018. What is the risk of firm?
What is the yield on two year treasury securities : Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities?
What is real risk-free rate of return : Real Risk-Free Rate You read in The Wall Street Journal that 30-day. On the basis of these data, what is the real risk-free rate of return?
Describe the similarities between all four services : Select four health care services, such as primary care, mental health, rehabilitation services, acute care, military and veteran services, or Indian health.
Reflect on two recent professional interactions : You are to present the findings of the tools. In doing so you will show your understanding of the results as they apply to your personal situation.
Develop a promotional activity advertising text : You will develop a promotional activity advertising text required for a magazine promotion according to the marketing action plan.
Analyze the ethical challenges presented by this situation : Review the literature for sources that can help illuminate this issue for you, and incorporate these insights into your analysis.

Reviews

Write a Review

Financial Management Questions & Answers

  Best strategy for your athletic business

The New Shoes simulation offers three regions in which your athletic company operates. The foreign region may be an option for your organization as the simulation develops. Which strategies would be best suited to meet the needs of your foreign marke..

  Net working capital can be described

Net Working Capital can be described as, Which of the below is always a 'non-cash' expense?

  Which one of the following is not form of dividend

Which one of the following is not form of dividends a) cash b) stock dividends

  What is the maximum amount you would pay for the investment

Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 12 percent required rate of return?

  Find the number of full payments required

Find the number of full payments required and the size of the concluding payment.

  Economy affects ability to successfully defend sale forecast

Do you think the economy affects the ability to successfully defend a sales forecast? For example, is it more difficult to defend growth in your sales forecast during a recession? Why or why not?

  Elizabeth is offered to buy a financial security

Elizabeth is offered to buy a financial security that guarantees to pay her $10 every 2 years forever. The annual interest rate is 8%. How much would she pay for it today if the first payment will be received today? How much would she pay for it toda..

  Income statement and balance sheet in regards to timing

What is the difference between the income statement and balance sheet in regards to timing? What is wrong with this statement: "The clinic's cash balance for 2011 was $150,000, while its net income on December 31, 2011 was $50,000."

  Your mortgage banker offers you three choices for mortgage

You have found a condo in Hoboken you would like to buy that costs $500,000. Your mortgage banker offers you three choices for a mortgage and is willing to fina

  Briefly explain how an interest rate swap agreement

Briefly explain how an interest rate swap agreement can benefit BGT. Be specific about the pay-fixed position.

  What is the equivalent annual cost of this machine

Tool Makers, Inc. uses tool and die machines to produce equipment for other firms. The initial cost of one customized tool and die machine is $850,000. This machine costs $10,000 a year (after-tax) to operate. Each machine has a life of 3 years befor..

  What was the annual effective rate of interest

Joanna deposits $200 at the beginning of every quarter in the bank account. Five years later the balance in the bank is 4, 500. What was the annual effective rate of interest?

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