Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. tb mc qu.6-3 determinants of interest rate for ind

TB MC Qu.6-3 Determinants of Interest Rate for Individual : Determinants of Interest...

50.1K

Verified Solution

Question

Accounting

TB MC Qu.6-3 Determinants of Interest Rate for Individual :
Determinants of Interest Rate for Individual Securities You are considering an investment in 30-year bonds issued by a corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 3.60 percent. Your broker has determined the following information about economic activity and the corporation's bonds:
Real interest rate =2.80%
Default risk premium =2.35%
Liquidity risk premium =1.00%
Maturity risk premium =2.10%
What is the inflation premium? What is the fair interest rate on the corporation's 30-year bonds?
Multiple Choice
80% and 1.81%, respectively
80% and 8.25%, respectively
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Diagram and give a specific example of short-loop and long-loop negative feedback in endocrine regulation. Describe...

Medical Sciences
Q

Can someone explain to me the concept of composite DSSC solar panel?

Electrical Engineering
Q

I have an externa file lets call it \"data\" which is not written in the MaTLab,...

Electrical Engineering
Q

A marketing research firm provides you with the following information. Historically, they have correctly predicted a...

Advance Math
Q

1 DNA replicates in a mode 2 In the DNA given below which is the...

Biology
Q

Ans 25113 6 N m 3 A U tube differential manometer connects two pressure pipes...

Physics
Q

1 Acceleration due to gravity everywhere on the equator of a spherical asteroid of radius...

Physics
Q

Given the following table of values of the polynomial f x what is the minimum...

Calculus
Q

Graph f x 5x 1 1 First drag the two blue points on graph to...

Calculus
Q

Is a taxpayer allowed to change their election to itemize deductions once a return is...

Accounting
Q

Cisco Systems, Inc. Analysis of Cash Flows On the next page of this...

Accounting
Q

Alyeska Services Company, a division of a major oil company, provides various services to the...

Accounting