What is the liquidity premium on niendorf bonds

Assignment Help Finance Basics
Reference no: EM13285226

Niendorf Corporation's 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Niendorf's bonds is DRP = 1.20% 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 liquidity premium (LP) on Niendorf's bonds?

Reference no: EM13285226

Questions Cloud

What is mr. smith bond worth today : Investor G. Smith owns a 5-year, $1000 bond with a 5% coupon. If the yield to maturity on similar bonds is currently 10%, what is Mr. Smith bond worth today ?
Change in entropy for a particular reaction : The change in entropy for a particular reaction is -22J/mole-k. In order for the reaction to be spontaneous at a temperature of 290K, the delta H must be below what value in KJ/mole?
Explain the specific heat of a certain type of metal : The specific heat of a certain type of metal is 0.128 J/(g x C). What is the final temperature is 305 J of heat is added to 63.8 g of this metal initially at 20.0 C
Must a validity coefficient be positive to be useful : Must a validity coefficient be positive to be useful? Explain. Why is a time interval between predictor and criterion data collection both a strength and a weakness of a predictive validation strategy?
What is the liquidity premium on niendorf bonds : What is the liquidity premium (LP) on Niendorf's bonds?
Calculate earths average speed relative to the sun : Calculate Earth's average speed relative to the Sun (in m/s). According to my book, the answer is 3.0x10^4 m/s
Find examples of both effective and flawed news releases : Find examples of both effective and flawed news releases. Analyze the flawed releases for conformity to the legal requirements concerning defamation, libel, invasion of privacy, copyright, trademark, logo, registered mark, and patent.
What is the future value for each payment made : Compute the future values of the following first assuming that payments are made on the last day of the period and then assuming payments are made on the first day of the period.
Explain zinc hydroxide is insoluble in water but dissolves : zinc hydroxide is insoluble in water but dissolves when nitric acid solution is added, why? Write a balanced total ionic and net ionic equation for this reaction.

Reviews

Write a Review

Finance Basics Questions & Answers

  How much of the payment by the tenth year

can you explain why the figure change?if the interest rate doubles, would you expect the mortagage payment to double?

  Four time value of money concepts

Explain the four time value of money concepts - present value, present value of an annuity, future value, and future value of annuity.

  What was net capital spending for 2011

The company's 2011 income statement showed a depreciation expense of $385,000. What was net capital spending for 2011?

  How much will be in your account after 5 years

You plan to leave the money in the bank for 5 years. How much will be in your account after 5 years? Round your answer to the nearest cent.

  Find the discount factor

At an interest rate of 12 percent, the six-year discount factor is .507. How many dollars is $.507 worth in six years if invested at 12 percent? If the PV of $139 is $125, find the discount factor?

  Calculate the variance and expected return

Financial analysts believe that there are four equally likely states of the economy: depression, normal, and boom times. The returns on the Supertech Corporation are expected to follow the economy closely,

  What is the project''s initial cash flow?

1. Baldwin Corp. just paid a dividend of $2.00. Over the next two years this dividend is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. If the required rate of return on Baldwin stock is 12%, what ..

  Work of acquisition is in contract management

An IT acquisition guidance document states "there is a growing realization that real work of acquisition is in contract management." At the same time, there is the decrease in success rate of IT projects

  Discuss the purpose of an audit in the public sector

What is the purpose of an audit in the public sector? Why is public financial management important?

  Can she sue her start-up company for age discrimination

Jillian is convinced that she was fired because of her age since she is the only person over 22 in her office. Can she sue her start-up company for age discrimination? Why or why not?

  What is the cost of equity

Southern Home Cookin' just paid its annual dividend of $0.65 a share. The stock has a market price of $13 and a beta of 1.12. The return on the U.S. Treasury bill is 2.5 percent and the market risk premium is 6.8 percent. What is the cost of equit..

  Make journal entries to record transactions

On the 1st December 2011, Betty, Alvin & Yogee started a watch trading company, Baywatch Pvt. Ltd. with a paid up capital of $150,000 to be subscribed equally by the three (3).

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