Yield in percent on a 3-year corporate bond

Assignment Help Finance Basics
Reference no: EM133076595

An analyst evaluating securities has obtained the following information. The real rate of interest is 2%and is expected to remain constant for the next 3 years. in?ation is expected to be 3% next year, 3.5% the following year. and 4% the third year. The maturity risk premium is expected to be 0.1 x (H) where t is the number of years to maturity. The liquidity premium on relevant 3-year securities is 0.25% and the default risk premium on relevant 3-year securities is 0.6%. What is the yield in percent on a 3-year corporate bond?

Reference no: EM133076595

Questions Cloud

Comparing erp vendors : Comparing ERP Vendors: You have been appointed as a consultant to a small manufacturing company that is planning to select an ERP software vendor. The company h
What is the initial net cash flow : ABC Company is considering replacing its machine with a newer one. The old machine has a book value of $674,557 with a remaining life of 5 years. It has been de
Calculate and record in column a the related after-tax cash : Pre-tax savings of $12,800 in cash expenses will occur in each of the next six years. Calculate and record in column A the related after-tax cash
What is the default risk premium : A 5-year corporate bond has a yield of 8% and a liquidity premium of 1.5%. What is the default risk premium on the corporate bond?
Yield in percent on a 3-year corporate bond : An analyst evaluating securities has obtained the following information. The real rate of interest is 2%and is expected to remain constant for the next 3 years.
Identifying Public Health Communication : Identifying Public Health Communication - Which social determinants of health are addressed - Is the information presented designed to inform or influence
Find current market environment : A common approach to security selection is the top down approach. In the top down approach the analyst first determines the state of the economy expected for th
What is the new profit and loss ratio of the partners : On January 1, 2007 Dominador Dizon was admitted into the partnership with a 30% share in the profit and losses. What is the new profit and loss ratio
Exchange for a promise to repay an amount : -Why do you think Toyota Motor Credit Corporation would be willing to accept such a small amount in 2008 ($24,099) in exchange for a promise to repay an amount

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the rate of return on investment

By buying this annuity, your agent promises that you will receive payments of $250 a month for the next 20 years.

  The risk-free rate of interest

The risk-free rate of interest is 3% and the market risk premium is 5%.

  The real risk-free rate is 225 and inflation is expected to

the real risk-free rate is 2.25 and inflation is expected to be 3.75 for the next 2 years. a 2-year treasury security

  Smith reported the following for 2006 beginning market

smith reported the following for 2006. beginning market price 20.00 average market price 24.00 ending market price

  How long will it take $200 to double

How long will it take $200 to double if it earns the following rates? Compounding occurs once a year. a. 7% b. 10% c.18% d. 100%

  Theories for organisational behaviour and dynamics

Describe a technique or strategy you could use to maximise workforce participation in each of the following:

  How real world multinational corporations reduce

how real world multinational corporations reduce their translation

  Approach to the modified internal rate of return

Should this project be accepted based on the discounting approach to the modified internal rate of return? Why or why not?

  Calculate the firm wacc adjusted

The number of securities outstanding, the current market price, and the required rate of return for these securities are stated in the table below.

  Determine the role of corporate financial officers

In the last few years, there have been many news stories about financial misdeeds of some major corporations, from Enron to Goldman Sachs.

  What is the most you would pay for this annuity

An insurance agent is trying to sell you an immediate-retirement annuity, which for a single amount paid today will provide you with $12,000 at the end of each year for the next 25 years. You currently earn 9% on low-risk investments comparable to th..

  Determine the total estimated cost at completion for the pro

The landscaping work has yet to start and no bills have been received. Determine the total estimated cost at completion for the project and the variance for each cost code.

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