The default risk premium on the corporate bond

Assignment Help Financial Management
Reference no: EM13882289

A Treasury bond that matures in 10 years has a yield of 6.5%. A 10-year corporate bond has a yield of 10.5%. Assume that the liquidity premium on the corporate bond is 2%. What is the default risk premium on the corporate bond?

Reference no: EM13882289

Questions Cloud

Indicate type of sensors : A factory is producing tablets. It is required to design a system such that: The bottles moves till it reach the position shown (A) and 50 tablets are dropped in
Creating a technology plan : Creating a Technology Plan- The "Big Three" of cash flow management-accounts receivable, accounts payable, and inventory, often dictate the success or failure of a business
Create a list of at least three potential suppliers : Create a list of at least three potential suppliers (preferably using real-life suppliers, but you may use fictitious names if you can't locate an existing company that supplies that material)
Draw a chart of job 2''s salary as a function of n : Because L fell from 41 to 31 years, what will happen to the present values of the earnings streams from the two jobs? Why does this happen?
The default risk premium on the corporate bond : A Treasury bond that matures in 10 years has a yield of 6.5%. A 10-year corporate bond has a yield of 10.5%. Assume that the liquidity premium on the corporate bond is 2%. What is the default risk premium on the corporate bond?
Develop intermediate-level web page consisting of valid html : Design and develop an intermediate-level Web page consisting of valid HTML content that includes semantic elements, images, and tables.
What is the future value of an ordinary annuity : What is the future value of an ordinary annuity of $1,000 per year for 7 years compounded at 10%? What would be the future value if it were an annuity due?
Are credit cards or debit cards money? : Are credit cards or debit cards money?
Should the firm purchase this production equipment : A company is considering the acquisition of production equipment which will reduce both labor and materials costs. The cost is $100,000 and it will be depreciated on a straight-line basis down to $0. Should the firm purchase this production equipment..

Reviews

Write a Review

Financial Management Questions & Answers

  Project beta and internal rate of return

Project Alpha has an internal rate of return (IRR) of 15 percent. Project Beta has an IRR of 14 percent. Both projects have a required return of 12 percent.

  Dealership advertises his understandable financing plan

Honest John's Car Dealership advertises his "understandable" financing plan on car purchases as follows. You pay 10% of the car's full price up front and 4% of the car's full price in 30 equal end-of-month payments For instance, if a car cost $15,000..

  Total current asset is

She also has mortgage on condo for $97,500 of which $3,200 is payable during the current year. total current asset is?

  Fully amortizing mortgage loan

A fully amortizing mortgage loan is made for $100,000 at 5 percent interest for 25 years. Payments are to be made monthly.

  Companys cost of equity capital

The Zombie Corporation’s common stock has a beta of 1.1. If the risk-free rate is 5.1 percent and the expected return on the market is 13 percent, what is the company’s cost of equity capital?

  What is the amount of the costs incurred by the firm

Jonstone Nurseries, Inc., incurred depreciation expenses of $31,300 last year. The sales were $212,000 and the addition to retained earnings was $18,405. The firm paid interest of $5,100 and dividends of $7,500. The tax rate is 34%. What is the amoun..

  What is the net new long-term debt

During 2014, Raines Umbrella Corp. had sales of $700,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $500,000, $90,000, and $95,000, respectively. what is the net new long-term debt?

  What is the beta of this stock

The common stock of Jensen Shipping has an expected return of 14.7 percent. The return on the market is 10.8 percent and the risk-free rate of return is 3.8 percent. What is the beta of this stock?

  What is the net working capital for 2012

What is the Net Working Capital for 2012 and what is it for 2011 - what is the Change in Net Working Capital (NWC)?

  Able to buy a really cool new car

Bart Simpson, age 10, wants to be able to buy a really cool new car when he turns 15. His really cool car costs $16,000 today, and its cost is expected to increase 3 percent annually. Bart wants to make one deposit today (he can sell his mint-conditi..

  The interest had compounded annually

Beatrice invests $1,410 in an account that pays 3 percent simple interest. How much more could she have earned over a 4-year period if the interest had compounded annually?

  Part of the process of cost allocation

Which of the following is not part of the Process of cost allocation?

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