What is the default risk premium on koys bonds

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1. Koy Corporation's 5-year bonds yield 8.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* = 3.0%, the inflation premium for 5-year bonds is IP = 1.75%, the liquidity premium for Koy's bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1) × 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Koy's bonds?

a. 2.18% b. 2.10% c. 2.48% d. 2.16% e. 2.12%

2. Blasco Inetnational has sales of $389,700 and costs of $413,210. The company has 120,000 shares outstanding. What is the price-sales ratio if the stock has a book value of $19.20 per share and a market value per share of $8.60?

A) 2.48

B) 2.65

C) 2.23

D) 2.37

E) 1.89

Reference no: EM131459159

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