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A corporate bond has a nominal interest rate of 12 percent. This bond is not very liquid and consequently requires a 2 percent liquidity premium. The bond is of low quality and thus has a default risk premium of 2.5 percent. The bond has a remaining life of twenty-five years, resulting in a maturity risk premium of 1.5 percent.
a. Estimate the nominal interest rate on a Treasury bond.
b. What would be the inflation premium on the Treasury bond if investors required a real rate of interest of 2.5 percent?
Show how to generate a supply and demand function from a information table that includes the supply and demand information for two different price levels.
Create a log return series from the stock price index (the log return is the change in the logarithm of the stock price). Estimate an appropriate pure AR(p) model and an appropriate pure MA(q) model and compare these to a mixed ARMA(1,1) model.
Analyze each macroeconomic model discussed in Chapter 13 to determine which model you believe is viable across the greatest number of economic situations. Explain your rationale.
If people hold no currency and travelers checks, banks loan out all excess reserves. What would the new money supply be if the fed purchases bonds worth 1 billion from the public?
Analyze the risks involved in the foreign-exchange market and create a list of best practices that almost any organization conducting international business would find valuable.
the pizza company is considering entering the marketplace in your community. use the information from the pizza company
where i is the domestic interest rate, i* the foreign interest rate, E and Ee are the actual and expected exchange rate, respectively. Referring to this equation as needed, explain why investors pay attention to the exchange rate when making investme..
countries a and b have the same rates of investment population growth and depreciation. they also have the same levels
Discuss whether economic theory and the available empirical evidence justifies high executive compensation.
examine a perfectly competitive firm that you have recently purchased a product from focusing specifically on how it
Calculate the net present value and benefit-cost ratio for four different discount rates
How would you describe the complexity of the health industry in terms of workforce, environment, and social expectations? How would a health leader successfully navigate this complexity?
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