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A. The real risk-free rate is 3%. Inflation is expected to be 2% this year, 4% next year, and then 3.5% thereafter. The maturity risk premium is estimated to be 0.0004 x (t - 1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security? Round your answer to two decimal places.
B. Absalom Motors's 8% coupon rate, semiannual payment, $1,000 par value bonds that mature in 30 years are callable 6 years from now at a price of $1,025. The bonds sell at a price of $1,254.87, and the yield curve is flat. Assuming that interest rates in the economy are expected to remain at their current level, what is the best estimate of the nominal interest rate on new bonds? Round your answer to two decimal places.
transformational versus transactional leadershipresearch evaluate and discuss the similarities and differences between
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Calculate the value of a 3-month European put option on the stock with an exercise price of $40. - Verify that no-arbitrage arguments and risk-neutral valuation arguments give the same answers.
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Which of the following statements regarding the tax implications of key employee life insurance is correct?
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1. the roe ratio tells us how much investors are willing to pay for a dollar of accounting book value. in general
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