User Account

All Pages

Calculate the liquidity risk premium on tom and sue

Assignment Help Finance Basics
Reference no: EM131190045

Tom and Sue's Flowers, Inc.'s, 20-year bonds are currently yielding a return of 8.80 percent. The expected inflation premium is 2.80 percent annually and the real risk-free rate is expected to be 3.50 percent annually over the next 20 years. The default risk premium on Tom and Sue's Flowers' bonds is 0.80 percent. The maturity risk premium is 0.75 percent on 10-year securities and increases by 0.03 percent for each additional year to maturity. Calculate the liquidity risk premium on Tom and Sue's Flowers, lnc.'s, 20-year bonds. (Round your answer to 2 decimal places.)

Reference no: EM131190045

Questions Cloud

Targeted weighted average cost of capital : Central Systems, Inc. desires a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 5 percent and a cost of equity of 11 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted aver..
Maturity and a market interest rate : Compute the price of a 5.6 percent coupon bond with 10 years left to maturity and a market interest rate of 9.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal pl..
Problem regarding the percent coupon bond : Compute the price of a 5.6 percent coupon bond with 10 years left to maturity and a market interest rate of 9.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal pl..
What is the current price-what will price be in three years : The Starr Co. just paid a dividend of $1.90 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year, indefinitely. Investors require a return of 10 percent on the stock. What is the current price? What will..
Calculate the liquidity risk premium on tom and sue : The maturity risk premium is 0.75 percent on 10-year securities and increases by 0.03 percent for each additional year to maturity. Calculate the liquidity risk premium on Tom and Sue's Flowers, lnc.'s, 20-year bonds. (Round your answer to 2 decim..
Discuss the impact that the commission report had on fbi : Discuss the impact that the 9/11 commission report had on FBI and CIA regarding their counterterrorism activities (e.g. the investigative techniques before and after September 11th, 2001). Provide a rationale to support your response.
Determine whether ability or motivation is more important : Determine whether ability or motivation is more important in selecting the right person for the right job. Explain your rationale.
Issue of preferred stock outstanding : Ayden, Inc., has an issue of preferred stock outstanding that pays a dividend of $4.95 every year, in perpetuity. This issue currently sells for $94 per share. What is the required return?
Firm market value capital structure : What is the firm's market value capital structure?

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe compare and contrast the following common stock

Describe, compare, and contrast the following common stock dividend valuation models: (a) Zero-growth, (b) Constant-growth, and (c) Variable-growth.

  Rate of return for investment

What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.)

  Company net income for 2015

What is the company's net income for 2015? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

  Calculate the expected return on the portfolio

Calculate the expected return on the portfolio after the purchase of the Tundra stock? Calculate the expected beta on the portfolio after you add the new stock?

  What is the npv of the electric scooter project under the

what is the npv of the electric scooter project under the following scenario?market size1.1 millionmarket share.1unit

  What is the bond refunding npv

The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short-term government securities returning 6 percent annually during the interim period.a. Perform a complete bond refunding analysis. What is ..

  Define stated rate periodic rate and effective annual rate

Define (a) the stated (or quoted or nominal) rate, (b) the periodic rate, and (c) the effective annual rate (EAR or EFF%).

  Percent change in the cash coverage ratio

What is the approximate percent change in the cash coverage ratio? What is the precise percent change in the cash coverage ratio?

  Objective type questions on periodic inventory system

Objective type questions on periodic inventory system and what is the inventory method that would result in the highest ending inventory is

  What does it mean for the trials to be independent

What does it mean for the trials to be independent in a binomial experiment?

  Irr and profitability index for all projects

Calculate the NPV, IRR and Profitability Index for all projects - Explain how cash flow pattern of each project affects its profitability and place on the ranking grid.

  Lowest effective rate for wolf howl jackets

Which of the following offer the lowest effective rate for Wolf Howl jackets? Assume Wolf Howl will need to borrow $800,000 for 180 days.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd