What is default risk premium on the corporate bond

Assignment Help Financial Management

Reference no: EM131044128

A Treasury bond that matures in 14 years has a yield of 4.33%. A 14-year corporate bond has a yield of 7.39%. Assume that the liquidity premium on the corporate bond is 0.33%. What is the default risk premium on the corporate bond? State you answer as a percentage to 2 decimal places.

Reference no: EM131044128

Questions Cloud

The maximum federal tax rate on personal income : The maximum federal tax rate on personal income in 2010 was 50%. Since companies can deduct dividends paid but not interest paid, our tax system favors the use of equity financing over debt financing, and this causes companies' debt ratios to be lowe..

Coupon rate needs to be set on this bond with warrants issue : A company wishes to issue a 10-year bond. To lower it's cost of debt, the company attaches 25 warrants to each bond. Each warrant has a strike(EG exercise) price of $25 and 5 years until expiration. What coupon rate needs to be set on this bond with ..

Explain in details macroeconomics balance as a basic concept : Write an essay to explain in details macroeconomics balance as a basic concept of modern economics.

Identifying ways to improve internal processes : Internal processes of a company contribute to the company's overall effectiveness. Identifying ways to improve internal processes helps build a highly efficient organization. Root causes need to be identified. Methods to identify root causes may r..

What is default risk premium on the corporate bond : A Treasury bond that matures in 14 years has a yield of 4.33%. A 14-year corporate bond has a yield of 7.39%. Assume that the liquidity premium on the corporate bond is 0.33%. What is the default risk premium on the corporate bond?

Hr director of a large corporation : Tell me why it is important to understand HRIS if you worked as a HR Director of a large corporation (Base your introduction on our reading material from week 1-5) - Also, construct your introduction from the requirements that you select below)

Important aspect of business : Budgets are an important aspect of any business. How do managers use budgets specifically? What type of information do budgets provide to managers?

Ultimate purpose of the decision : Select a topic with which you are familiar that involves making a decision. Prepare an argument in which you label each of these parts: In what kind of sphere is the decision to be made? What is the ultimate purpose of the decision?

How much should the firm produce to maximize profit : Calculate profit for each quantity. How much should the firm produce to maximize profit? Calculate marginal revenue and marginal cost for each quantity

User Account

All Pages