What is the fair interest rate on the corporation

Assignment Help Accounting Basics
Reference no: EM132774931

Question - Determinants of Interest Rate for Individual Securities You are considering an investment in 30-year bonds issued by a corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 5.30 percent. Your broker has determined the following information about economic activity and the corporation bonds:

Real interest rate = 4.15%

Default risk premium = 2.55%

Liquidity risk premium = .40%

Maturity risk premium = 2.30%

Required - What is the inflation premium? What is the fair interest rate on the corporation's 30-year bonds?

Reference no: EM132774931

Questions Cloud

Calculate the two prices division w would have : Calculate the two prices Division W would have to quote to Division B, if it became AWB Ltd. policy to quote transfer prices based on opportunity costs
Calculate the annual amortization expense : A patent with a ten-year remaining legal life was purchased for $300,000. Calculate the annual amortization expense
Which amount should the company report for this note payable : A company has signed a $10,000, three-year notes payable with a 10% annual interest rate. Which amount should the company report for this note payable
What is needed in the journal entry to record these sales : Debit to state unemployment taxes payable for $24,000. What is needed in the journal entry to record these sales?
What is the fair interest rate on the corporation : The Wall Street Journal reports that 1-year T-bills are currently earning 5.30 percent. What is the fair interest rate on the corporation
How much fund can you accumulate on your retirement date : If you can afford to contribute USD$4000 monthly to this retirement saving plan for the next 25 years, How much fund can you accumulate on your retirement date
Differences between financial and managerial accounting : Discuss the differences between financial and managerial accounting. What types of financial statements are used by business organizations
What is the terminal value : The current cap rate for this type of investment is 8%. Assuming the above question new going - out Cap Rate is 7.75%. What is the Terminal Value
Determine the cancellation charges payable : Assuming that the flat charges for the cancellation is '100 and exchange margin is 0.10%, then determine the cancellation charges payable by the customer

Reviews

Write a Review

Accounting Basics Questions & Answers

  Production cost data

Crawford Company has the following equivalent units for July: materials 10,000 and conversion costs 9,000. Production cost data are:

  Rovniak reeds a manufacturer of saxophone oboe and clarinet

rovniak reeds a manufacturer of saxophone oboe and clarinet reeds has projected sales to be 890000 in october 950000 in

  Calculate the eva for east mullett manufacturing

Total capital employed equaled $1,200,000. East Mullett's actual cost of capital is 4%. Calculate the EVA for East Mullett Manufacturing

  What is the annual dividend on the preferred stock

ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock, What is the annual dividend on the preferred stock

  Find net cash provided by operating activities for year is

Accounts payable decreased by €3,000 and depreciation expense of €5,000 was recorded. Net cash provided by operating activities for the year is

  Which expenses are budgeted to increase the most

Telephone and mailing expenses are scheduled to increase by 8 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs.

  The corporate headquarters and central accounting office

roniger products company operates three divisions each with its own manufacturing plant and marketingsales force. the

  The information that follows pertains to consumer products

the information that follows pertains to consumer products for the year ended december 31

  Your answers may differ from those offered below due to

ire corporation uses the weighted-average method in its process costing system. data concerning the first processing

  Calculate the impending cost

Calculate the impending cost of a 7% debenture which is currently quoted at $90. It will be redeemed at $101 in five years time

  Journalize the adjusting entry required

The balance in the unearned fees account, before adjustment at the end of the year, is $44,900. Journalize the adjusting entry required

  What is the predetermined manufacturing overhead rate

The cost of the direct materials that can be used to manufacture the table are as follows. What is the predetermined manufacturing overhead rate?

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