What is the default risk premium on the corporate bonds

Assignment Help Accounting Basics

Reference no: EM131959130

Question: A company's 5-year bonds are yielding 7.4% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate (r*) is 2.5%. The average inflation premium is 2.3%, and the maturity risk premium is estimated to be 0.1(t - 1) %, where t = number of years to maturity. If the liquidity premium is 1.5%, what is the default risk premium on the corporate bonds? %

Reference no: EM131959130

Questions Cloud

Prepare a partial balance sheet showing the bonds : Prepare a partial balance sheet showing the bonds at December 31, assuming that Entity A had used the effective interest method from the inception.

What is the amount of the long-term lease obligation : What is the amount of the long-term lease obligation that Luke should report on its December 31, 2017 balance sheet?

Kind of conceptual questions for acid and base : What kind of conceptual questions for acid and base is hard and need to focus on, please give me some directions.

What would be the size of your fixed monthly payments : It is January 1, 2016. Starting today, you plan to invest $5,000 at the beginning of every quarter for fifteen years into a pension fund.

What is the default risk premium on the corporate bonds : A company's 5-year bonds are yielding 7.4% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate (r*) is 2.5%.

Calculate standard reaction enthalpy of reaction : 1. Calculate the standard enthalpy change for the following chemical equation, using the supplied reactions below.

Prepare an amortization table for ghoul : Interest is payable each June 30 and December 31, with the first payment on June 30, 2015. On January 1, 2015, the market rate of interest was 8%.

Create a database in sqlite using the given create statement : Create a database in SQLite using the following create statements. Create table process_list (Machine_Name text, process_name text, pid text).

Finding the estimated value of the stock : Company A just paid a dividend of $5 on its common stock. Dividends are expected to grow at 5%. Investors have historically required a return of 11%.

User Account

All Pages