Estimate the expected real rate of return

Assignment Help Finance Basics
Reference no: EM13747095

A thirty- year U. S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten- year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. Investors expect inflation to average 1.5 percentage points over the next ten years.

a. Estimate the expected real rate of return on the ten- year U. S. Treasury bond.

b. If the real rate of return is expected to be the same for the thirty- year bond as for the ten- year bond, estimate the average annual inflation rate expected by investors over the life of the thirty- year bond.

Reference no: EM13747095

Economy effects on assets management

Assume that you recently graduated with a major in Finance and you landed a job as a financial planner with a large financial services corporation. The organization where yo

Determine its annual dividend

Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 500,000 shares of common stock outstanding, and its stock trade

What is the dividend yield

The next dividend payment by Hillside Markets will be $2.35 per share. The dividends are anticipated to maintain a 4.5 percent growth rate forever. The stock currently sells

Preparing to conduct business research

Build on the business problem identified in Preparing to Conduct Business Research: Part 1, which is the attached paper. This paper must have scholarly references and additi

What is a cost-volume-profit analysis

The Housekeeping Service department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs in 2007. What is a cost-volume-profit (CVP) analy

Fx forcasting using purchasing power parity

The expected inflation rate now until the end of 2015 is 2.5% in the US, and 12% in Argentina, respectively.  The current spot exchange rate between Argentina peso (AP) and

Return on stockholders equity

What is its return on stockholders' equity? If the base remains the same as computed in part a, but total asset turnover goes up to3, what will be the new return on stockhol

What is the stocks value

California Clinic California Clinics, an investor-owned chain of ambulatory care clinics, just paid a dividend of $2 per share. The firm's dividend is expected to grow at a

Reviews

Write a Review

 
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