What should be the nominal return

Assignment Help Finance Basics
Reference no: EM13284091

Default risk premium is 1.2%, liquidity premium is 0.8%, maturity risk premium is 2% and the minimum lending rate is 4%. Based on the above information, what should be the nominal return?

Reference no: EM13284091

Questions Cloud

How many of your shares of stock in m and s : How many of your shares of stock in M and S must you sell to offset the leverage that the firm is assuming? Assume that you loan out all of the funds you receive from the sale of your stock.
What level of deposits are being held : Assume a bank has $5 million in deposits and $1 million in vault cash. If the bank holds $1 million in excess reserves and the required reserves ratio is 8 percent, what level of deposits are being held?
Design the 4-bit adder-subtractor circuit with circuit : Design the 4-bit adder/subtractor circuit with look ahead carry circuit. Draw a logic circuit diagram of your circuit with pin numbers on all logic gates.
What is the future value of an investment : What is the future value of an investment which compounds annually at 8% and starts at $1,000/year and grows by 10% per year for 20 years (starting with the second year)?
What should be the nominal return : Default risk premium is 1.2%, liquidity premium is 0.8%, maturity risk premium is 2% and the minimum lending rate is 4%. Based on the above information, what should be the nominal return?
What should be the nominal return : Default risk premium is 1.2%, liquidity premium is 0.8%, maturity risk premium is 2% and the minimum lending rate is 4%. Based on the above information, what should be the nominal return?
What is the bond duration : An annual payment bond with a $1,000 par has a 5% quoted coupon rate, a 6% promised ytm, and 6 years to maturity. What is the bond's duration?
Interest rates fluctuate in the economy over various cycles : Interest rates fluctuate in the economy over various cycles. When interest rates are low, organizations may decide to issue debt as the cost of debt is low. However, this is likely to happen only with financially strong organizations because inter..
What will be the total deposits in long run : The total reserves are $50 million and current reserve requirement is 7% reserve. If the Fed decreases reserve requirements by 1% then what will be the total deposits in long run?

Reviews

Write a Review

Finance Basics Questions & Answers

  What are the cost savings to each party

whereas Virgin can borrow dollars at 8% and pounds at 8.5% and What range of interest rates would make this swap attractive to both parties and what are the cost savings to each party?

  Risk tolerance as well as your need to diversify

Risk tolerance as well as your need to diversify the portfolio and the Effects of Portfolio Risk for Average Stocks will impact your future investment decisions

  Estimate for the risk premium for the market portfolio

Additionally, your estimate for the risk premium for the market portfolio is 5.00 percent and the risk-free rate is currently 4.50 percent.

  What stock price would you consider appropriate

The Sleeping Flower Co. has earnings of $1.75 per share. The benchmark PE for the company is 18. What stock price would you consider appropriate? What if the benchmark PE were 21?

  Formulate and justify an investment policy statement

Mr. Jones is forty-five years old and is in good health. He is married, and has two children aged 17 and 18. He and his wife own all shares in a Limited Liability Corporation that owns a tavern and adjacent restaurant presently valued,

  Differences between forward contract-futures contract

What can a firm do to reduce foreign exchange risk? What are the differences between a forward contract, a futures contract, and options?

  What is northern cash conversion cycle

Cash conversion cycle: Northern Manufacturing Company found that during the last year, it took an average of 47 days to pay its suppliers, while it took 63 days to collect its receivables. The company's days' sales in inventory was 49 days. What i..

  What are the two types of leaps

What are LEAPS? What are the two types of LEAPS? What are the benefits of equity LEAPS? What are the benefits of index LEAPs?

  What is the value of an fra that enables the holder to earn

The 12-month, 15-month, 18-month zero rates are 4.5%, 4.6%, 4.7% with continuous compounding. What is the value of an FRA that enables the holder to earn 5.7% (with semiannual compounding) for a 3-month period starting in 1 year on a principal of $1,..

  What is the default risk premium on the corporate bond

A Treasury bond that matures in 10 years has a yield of 5.75%. A 10-year corporate bond has a yield of 7.25%. Assume that the liquidity premium on the corporate bond is 0.7%. What is the default risk premium on the corporate bond?

  Risk for corporate investment and financing activities

Discuss and explain some examples of factors that can contribute to corporate risk? Determine how can organizations mitigate these risks?

  How much will the firm pay its suppliers

Assume the company places orders during each quarter equal to 45 percent of projected sales for the next quarter. How much will the firm pay its suppliers in quarter 3 if the firm has a 60-day payables period?

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