Problemcorporations 5-year bonds yield 675 and 5-year, Ask an Expert

Accounting

Problem:

Corporation's 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Niendorf's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) 0.1%, where t = number of years to maturity.

Requirement:

Question: What is the liquidity premium (LP) on Niendorf's bonds?

Note: Please provide full description.

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170688

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Question - henry company manufactures two types of office

Question - Henry Company manufactures two types of office chairs, Model A and Model B. It estimates the following results for next year. Model A Model B Sales Revenue $450,000 $50,000 Variable Expenses (total): $140,00 ...

Part abackgroundsaturn petcare australia and new zealand

Part A Background: Saturn Petcare Australia and New Zealand is Australia's largest manufacturer of pet care products. Saturn have been part of the Australian and New Zealand pet care landscape since opening their first m ...

Question - vestorville company reported the following

Question - Vestorville Company reported the following results from last year's operations Sales 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income 200,000 Average ...

Quesiton company general mills incfinancial ratios are used

Quesiton: Company: General Mills Inc Financial ratios are used to assess a company's strengths and weaknesses. One way to use ratios is to compare the company under consideration to the industry average. Deriving meaning ...

Question -waterway inc had net sales in 2017 of 1492600 at

Question - Waterway, Inc. had net sales in 2017 of $1,492,600. At December 31, 2017, before adjusting entries, the balances in selected accounts were Accounts Receivable $232,200 debit, and Allowance for Doubtful Account ...

Fundamentals of value creation in business assignment -

FUNDAMENTALS OF VALUE CREATION IN BUSINESS ASSIGNMENT - ACCOUNTING Requirements - 1. The following is a list of companies from the latest ASX. These companies are carefully chosen to suit this project and the learning ou ...

Qestion - a racing bike is listed for 129344 less 18 9

Question - A racing bike is listed for $1293.44 less 18 %, 9 %, and 3%. a. What is the net price? b. What is the total amount of discount that was allowed? c. What is the exact single rate of discount that was allowed?

Question - the following data have been provided by graise

Question - The following data have been provided by Graise Corporation from its activity-based costing accounting system: Factory supervision $ 300,000 Indirect factory labor 160,000 Distribution of Resource Consumption ...

Question - on january 1 2017 boston enterprises issues

Question - On January 1, 2017, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par. Explain how it ...

Question - bryant leased equipment that had a retail cash

Question - Bryant leased equipment that had a retail cash selling price of $740,000 and a useful life of five years with no residual value. The lessor paid $600,000 to acquire the equipment and used an implicit rate of 7 ...

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

Recent Questions

Ask Accounting Basics Expert