What is the seniority risk premium on american common stock

Assignment Help Finance Basics

Reference no: EM13298329

The real rate of interest has been estimated to be 3 percent, and the expected long-term annual inflation rate is 7 percent.

a. what is the current risk-free rate of return on 1-year Treasury Bonds?

b. If the yield on 10-year U.S. Treasury bonds is 12 percent, what is the maturity risk premium between a 10-year bond and a 1-year bond?

c. If American Airlines bonds, scheduled to mature in 10 years, currently sell to yield 13 percent, what is the default risk premium on these bonds?

d. If investors in the common stock of American Airlines require a 16 percent rate of return, what is the seniority risk premium on American's common stock?

Reference no: EM13298329

Questions Cloud

What is value of a share of gamma corporation common stock : What is the value of a share of Gamma Corporation common stock to an investor who requires a 20 percent return on her investment?

What are key features of alternative project delivery method : As part of the procurement or contracting department of this federal agency, you need to demonstrate your understanding of the different project delivery methods and contract types available to the agency.

Find the speed of the block just after collision : a stell ball of mass m suspended by a thread of lenght l. the ball is then released when the thread is horizontal. at the bottom of this path, find the speed of the block just after collision

Approximate the current years balances : Approximate the current year's balances in the form of a balance sheet and income statement

What is the seniority risk premium on american common stock : If investors in the common stock of American Airlines require a 16 percent rate of return, what is the seniority risk premium on American's common stock?

Define what is the change in internal energy of a system : What is the change in internal energy (in J) of a system that absorbs 0.535 kJ of heat from its surroundings and has 0.362 kcal of work done on it

What is the horizontal distance traveled by the particle : Using the electric field described in the alpha cannon simulation, suppose that an alpha particle is fired upward from a height y = 0 m, What is the horizontal distance traveled by the particle

What is the effective annual interest rate on this lending : what is the effective annual interest rate on this lending arrangement?

Explain the adiabatic reversible expansion of an ideal gas : Show that for the adiabatic reversible expansion of an ideal gas, T1^(Cv/R)V1 = T2^(Cv/R)V2

User Account

All Pages