Maturity risk premiums , Financial Accounting

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

 

 

Posted Date: 3/28/2013 4:04:51 AM | Location : United States







Related Discussions:- Maturity risk premiums , Assignment Help, Ask Question on Maturity risk premiums , Get Answer, Expert's Help, Maturity risk premiums Discussions

Write discussion on Maturity risk premiums
Your posts are moderated
Related Questions
Ask qCamp Corp had the following balances in its stockholders'''' equity at jan 1: Common stock, $2, par value, 450,000 shares issued $900,000 Additional pd in capial 1,200,000 Ret

Powers of investment 1. Shares and debentures:  A trustee may: Invest in bearer securities if these would otherwise be authorised;    Acquiesce in an amalgamation

The time t= 0 continuously compounded term structure of interest rates is given by R(0 , T) = 0. 05 - 0. 005 e - 0.10 T . Find the price of a Treasury bond with exactly 3

Occasionally cash flows may have to be discounted more often than once a year semi- monthly, daily, annually or quarterly.  The outcome of this is as fold (i)  The number of per

Gary and Joyce Yau, both 30, last month bought their dream house in London, Ontario. The purchase price was $450,000 plus addition fees such as taxes, legal fees, administration fe

Combined income statement The figures to appear in the combined income statement are based on the following diagram: 1) An arrow pointing into a box refers to purchase

The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000. 10 marks Summer 2013 Sundry Debtors Rs.160000 Bad Debts written off Rs 9000 Dis

Q. What do you mean by Grant date in Stock Option? Grant date - The date at which an employee and an employer reach a mutual understanding of key terms and conditions of a shar

Determine balance sheet: Income Statements Year Ended December 31, 20X8   Insure Co. Go-med Co. Sales $3,900,000

Q. What is Credit Analysis? Potential credit customers must be carefully screened using such methods as bank references, trade references, credit reports from credit reference