What rate of interest should the u.s. corporate bond pay

Assignment Help Finance Basics

Reference no: EM13297209

You are considering an investment in an AAA-rated U.S. corporate bond but you are not sure what rate of interest it should payAssume that the real-risk free rate of interest is 1.0%; inflation is expected to be 1.5%; the maturity risk premuim is 2.5%; and, the default risk premuim for AAA rated corporate bond is 3.5%. What rate of interest should the U.S. corporate bond pay? show all work.

Reference no: EM13297209

Questions Cloud

Explain an acid-base neutralization reaction is exothermic : An acid-base neutralization reaction is exothermic. For the measurement of the enthalpy of neutralization, the change in Hn(n is suppose to be a subscript), for the reaction, heat is inevitably lost to the calorimeter (beaker or styrofoam cup).

Determine the required reserves ratio : If the Friendly National Bank experiences a required reserves deficit, what actions can it take to be in compliance with the existing required reserves ratio?

Define where is the final image formed : Two converging lenses, each of focal length 14.9 cm, are placed 39.6 cm apart, define Where is the final image formed

Explain dust particles are not present to begin condensation : Supercooled (metastable) water vapor commonly occurs in the atmosphere if dust particles are not present to begin condensation of the liquid.Sometimes small particles,such as tiny crystals of silver iodide

What rate of interest should the u.s. corporate bond pay : Inflation is expected to be 1.5%; the maturity risk premuim is 2.5%; and, the default risk premuim for AAA rated corporate bond is 3.5%. What rate of interest should the U.S. corporate bond pay? show all work.

What is the refracted angle in that material : A light ray is incident upon a plane interface between two materials. what is the refracted angle (in degrees) in that material

What is pdq addition to retained earnings : The firm paid dividends to preferred stockholders of $40,000, and the firm distributed $60,000 in dividend payments to common stockholders. What is PDQ'S "Addition to Retained Earnings?'

Explain the crystal lattice structure of laf3 : The crystal lattice structure of LaF3 is different from those discussed. Assume it is unknown. Using the equation of Kapustinskii, estimate the lattice energy.

Compute the sales for nov : Compute the cash collection from sales for each month from January through March.

User Account

All Pages