Information regarding maturity risk premium

Assignment Help Accounting Basics
Reference no: EM13115730

Assume that the real risk-free rate, r, is 3 percent and that inflation is expected to be 8 percent in Year 1, 5 percent in Year 2 and 4 percent thereafter. Assume also that all Treasury securities are highly liquid and free of default risk. If 2 year and 5 year Treasury notes both yield 10 -percent what is the difference in the maturity risk premiums (MRPs) on the two notes, that is, what is MRP5 minus MRP2?

Please show formula only and answer only, Thanks

Reference no: EM13115730

Questions Cloud

Compute what resolving power is needed to measure : Compute what resolving power is needed to measure with a spectrograph the natural line width of the alpha particles from Po-212
Find fraction of defective items gets by both inspectors : the probability that it gets by the first inspector is 0.1. Of those that get past the first inspector, the second inspector will miss 5 out of 10. What fraction of the defective items gets by both inspectors?
Calculate the molar heat of reaction : When 0.800 g of Ca metal is added to 200.0 mL of 0.500 M HCl(aq), a temperature increase of 13C is observed.Assume the solution's final volume is 200.0 mL, the density is 1.00 g/mL.
What was the ph gradient across the membrane : Peter Mitchell and colleagues determined that the total proton motive force across the inner mitochondrial membrane at 37 degree celsius was 230mV, of which 70% was due to the electrical potential. What was the pH gradient across the membrane?
Information regarding maturity risk premium : Assume that the real risk-free rate, r, is 3 percent and that inflation is expected to be 8 percent in Year 1, 5 percent in Year 2 and 4 percent thereafter.
Draw histogram and graph for probability function : Let X be the number obtained on the blue die minus the number obtained on the red die. Draw a histogram for its probability function and a graph for its distribution function.
What is the relationship between the enthalpy of a reaction : What is the relationship between the enthalpy of a reaction and its classification as endothermic or exothermic?
Illustrate what is the concentration of sodium and chloride : Illustrate what is the concentration of sodium and chloride ions at a distance 3 angstroms from protein surface.
What was the ph gradient across the membrane : Peter Mitchell and colleagues determined that the total proton motive force across the inner mitochondrial membrane at 37 degree celsius was 230mV, of which 70% was due to the electrical potential. What was the pH gradient across the membrane?

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Book value-market value

Filer Manufacturing has 9.5 million shares of common stock outstanding. The current share price is $53 and the book value per share is $5.

  Journals and ledger processing transactions

How are journals and ledger used in processing transactions? If a manufacturing company were to maintain special journals for purchases, sales, cash receipts, and cash disbursements, describe five journal entries that an AIS might make directly to..

  Constructive receipt argument

A taxpayer, who uses the cash method of accounting for tax purposes, received income in 1989, 1990, 1991 and 1992 for illegal espionage activities performed in 1985.

  Computing share price-dividend discount model

Colgate-Palmolive Company has just paid an annual dividend of $0.96. Analysts are predicting an 11% per year growth rate in earnings over the next five years.

  What is the most you should pay for this investment

Your investment adviser wants you to purchase an annuity that will pay you $25,000 per year for 10 years. If you require a 7% return, what is the most you should pay for this investment?

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Journal entries of bad debt amounts

On December 31, of the current year, a company's unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance). P..

  Expenses incurred and retained earnings relationships

Assume that retained earnings increased by $240,000 from December 31, 2005, to December 31, 2006, for Miller Corporation. During the year, a cash dividend of $140,000 was paid.

  Unocrrected misstatements

Uncorrected Misstatement and Performance Materiality. Rivers, CPA is auditing the financial statements of Charger Company, a client for the past five years. During past audits of charger, River has only identified some immaterial misstatements (mo..

  Equity-method reporting situations

In what types of situations could it be appropriate to use equity-method reporting even though the investor does not hold voting common stock of the investee? Explain.

  Determining the economic value of us division

Bella Vista’s U.S. Division reported sales of $300,000-The economic value added of the U.S. Division is

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