What is the exact real rate

Assignment Help Financial Management
Reference no: EM13879348

Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent. What is the approximate real rate of interest? What is the exact real rate?

Reference no: EM13879348

Questions Cloud

Compute the yield to call : A 4.25 percent coupon municipal bond has 13 years left to maturity and has a price quote of 105.10. The bond can be called in eight years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5..
Realized return is known as the holding period yield : The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).
What is the effective annual yield : Bourdon Software has 11.2 percent coupon bonds on the market with 20 years to maturity. The bonds make semiannual payments and currently sell for 108.4 percent of par. What is the current yield on the bonds? What is the effective annual yield?
What is the percentage price change of these bonds : Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 8 percent. If interest rates suddenly rise by 2 percent, what is the percentage price ..
What is the exact real rate : Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent. What is the approximate real rate of interest? What is the exact real rate?
Bonds on market making annual payments : Essary Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $976. At this price, the bonds yield 7.3 percent. What must the coupon rate be on the bonds?
Calculate the weights of capital : As a consultant to GBH skiwear, you have been ask to compute the appropriate discount rate to use to evaluate the purchase of a new warehouse facility. What discount rate should you use to evaluate the warehouse projects? Calculate the weights of cap..
Calculate the standard deviation in the anticipated returns : James Fromholtz is considering whether to invest in a newly formed investment fund. The fund’s investment objective is to acquire home mortgage securities at what it hopes will be bargain prices.  Based on these potential outcomes, what is your estim..
The overall cost of debt is the weighted average : Vedder, Inc., has 7.5 million shares of common stock outstanding. The current share price is $62.50, and the book value per share is $5.50. Vedder also has two bond issues outstanding. The first bond issue has a face value of $71.5 million, a coupon ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is expected return and standard deviation of portfolio

Stock X has an expected return of 8% and Stock Z has an expected return of 12%. The standard deviation of the expected return is 10% for both stocks. Assume that these are the only two stocks available in a hypothetical world. What is the expected re..

  Complete the contract and pay them a lump sum settlement now

Three years ago, Sam purchased a farm on contract from an older lady for $149,000 at 7% interest over 15 years. The lady died unexpectedly and the heirs would like Sam to pay off the contract now, which has a current remaining balance of $130,000 wit..

  Net present value of a project with a net investment

Calculate the net present value of a project with a net investment of $20,000 for equipment and an additional net working capital investment of $5,000 at time 0. The project is expected to generate net cash flows of $7,000 per year over a 10 year est..

  What is the yield to maturity of this bond

Dan is going to buy a 19 year bond that pays a coupon rate of 11.56% per year, and has a $1K par value. The bond currently priced $1,326.92? What is the yield to maturity of this bond? Assume annual coupon payments.

  Ratios required gearing- gearing and liquidity

Prepare financial ratios for Rolls Royce plc and Costainplc for 2010 &2011 which will enable the financial position and performance of the companies in 2011 to be measured. Ratios required Gearing: Gearing and Liquidity: Current, Acid Test

  The price of corporation stock is expected

The price of Corporation stock is expected to be $68 in 5 years. Dividends are anticipated to increase at an annual rate of 20 percent from the most recent dividend of $2.00. If your required rate of return is 16 percent, how much are you willing to ..

  Stock investments should be accounted for using cost method

Which of the following stock investments should be accounted for using the cost method?

  What ytm do these bonds offer

Johanson VI Advisors. Issued $1000 par value bonds a few years ago with a coupon rate of 7 percent, paid semiannually. After the bonds were issued, interest’s rates fell. Now with three years remaining before they mature, the bonds sell for $1,055.08..

  Infinite time horizon-the value of stock can be described

Given the infinite time horizon, the value of stock can be described as _____________________________

  Cost of equity with and without flotation

Javits & Sons' common stock currently trades at $29.00 a share. It is expected to pay an annual dividend of $2.00 a share at the end of the year (D1 = $2.00), and the constant growth rate is 7% a year. What is the company's cost of common equity if a..

  What is the average expected rate of inflation

Suppose that the annual expected rates of inflation over each of the next five years are 4 percent, 5 percent, 7 percent, 11 percent, and 10 percent, respectively. What is the average expected rate of inflation over the 5-year period? Use the arithme..

  What is its cash conversion cycle

Everdeen, Inc has a 100-day operating cycle. If its average age of inventory is 35 days, how long is its average collection period? If its average payment period is 30 days, what is its cash conversion cycle?

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