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Default Risk Premium
The real risk-free rate, r*, is 3.2%. Inflation is expected to average 2.25% a year for the next 4 years, after which time inflation is expected to average 4.4% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 11.35%, which includes a liquidity premium of 0.65%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.
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Consider two projects with the following cash flows: Project S is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 1500, 1200, 800 and 300 respectively.
What is the accounting break-even point?
Calculate the operating cash flow for Year 1.
Suppose the Simmons Co's common stock has a beta of 1.37, the risk-free rate is 3.4 percent, and the market risk premium is 8.2 percent. The yield to maturity in the firm’s bonds is 7.6 percent and the debt-equity ratio is .45. What is the cost of eq..
The semiannual, 8-year bonds of Alto Music are selling at par and have an effective annual yield of 8.6285 percent. What is the amount of each interest payment if the face value of the bonds is $1,000? Format to 6 decimal places.
Calculate Risk Weighted Assets of Nkumbu Bank; - Calculate the capital position of Nkumbu bank;- determine whether the bank has adequate capital or is capital deficient.
Jay owns 100% of Kaye Company. In 2011, Kaye Company recognizes a long-term capital gain (LTCG) of $100,000.
In 2015 the property tax rate for the city was 2.0858%, while the median for the state was 1.89%. What is the likely effect on property values in the city? What would the likely effect be of reducing the property tax rate in the city to 1.3%?
RAK, Inc., has no debt outstanding and a total market value of $150,000. Earnings before interest and taxes, EBIT, are projected to be $32,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 10 percen..
Value a Constant Growth Stock Financial analysts forecast Wal-Mart Stores (WMT) growth for the future to be 12.00 percent. Their recent dividend was $1.73. What is the value of their stock when the required rate of return is 15.00 percent?
What is the value of the swap to the bank?
Suppose we observe the three-year Treasury security rate to be 12%, the expected one-year rate next year - E(2r1) - to be 8% and the expected one-year rate the following year - E(3r1) - to be 9%.
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