Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

A 5-year Treasury bond has a 5.2% yield. A ten year Treasury bond yields 6.4 percent, and a ten year corporate bond yields 8.4 percent. The market expects that inflation will average 2.5 percent over the next 10 years [IP10 = 2.5 percent]. Assume that there is no maturity risk premium [MRP = 0], and that the annual real risk free rate, r*, will remain constant over the next 10 years. [Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.] A five year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described above. What is the yield on this five year corporate bond?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916019

Have any Question? 


Related Questions in Basic Finance

1 why should investors review their personal financial

1. Why should investors review their personal financial circumstances from time to time? 2. Why is asset allocation important? 3. List the strategies for increasing returns on a bond portfolio. 4. What are the tools of a ...

What economic factors play into creating jobs a

What economic factors play into creating jobs? A corporation/business needs to have customers in order to hire workers. How do interest rates affect available jobs?

There is an ongoing debate on the amount of regulation of

There is an ongoing debate on the amount of regulation of derivatives. What are your opinions on derivatives regulation? Should this market have increased regulation? Why or why not?

Business financewe develop the theory and application of

Business Finance We develop the theory and application of capital budget analysis. The theory was robust, the calculations mathematically and logically defined, and many of the real-world problems, likely to be encounter ...

The black bird company plans an expansion to be financed by

The black bird company plans an expansion to be financed by selling $190 million in new debut and $121 million in new common stock. The before-tax required rate of return on debut is 6.21% and the required rate of return ...

1 why do researchers use inferential statistics2

1. Why do researchers use inferential statistics? 2. Distinguish between the null hypothesis and the experimental hypothesis. 3. When analyzing data, why do researchers test the null hypothesis rather than the experiment ...

The scientific method can be described as a circle or a

The scientific method can be described as a circle or a spiral of steps that leads from an initial observation, to a hypothesis, to new observations, to a new hypothesis. For each of the following observations: a. State ...

1 under what conditions might a property with an assumable

1. Under what conditions might a property with an assumable loan sell for more than comparable properties with no assumable loans available? 2. What is meant by the incremental cost of borrowing additional funds? 3. Is t ...

1 for each of the following patterns of databull what is

1. For each of the following patterns of data, • What is the probability of the researcher having made a Type 1 error? • What is the probability of the researcher having made a Type 2 error? • Should the null hypothesis ...

You are a new loan officer with alpha mortgage and the

You are a new loan officer with Alpha Mortgage, and the manager of the loan department has just presented a problem to you. He is unable to complete the APR calculation on an adjustable rate mortgage which a borrower app ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen