User Account

All Pages

What is the inflation premium

Assignment Help Accounting Basics
Reference no: EM132774926

Question - You are considering an investment in 30-year bonds issued by a corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 3.90 percent. Your broker has determined the following information about economic activity and the corporation bonds:

Real interest rate = 2.95%

Default risk premium = 2.65%

Liquidity risk premium = 1.15%

Maturity risk premium = 2.40%

Required - What is the inflation premium? What is the fair interest rate on the corporation's 30-year bonds?

Reference no: EM132774926

Questions Cloud

How much fund can you accumulate on your retirement date : If you can afford to contribute USD$4000 monthly to this retirement saving plan for the next 25 years, How much fund can you accumulate on your retirement date
Differences between financial and managerial accounting : Discuss the differences between financial and managerial accounting. What types of financial statements are used by business organizations
What is the terminal value : The current cap rate for this type of investment is 8%. Assuming the above question new going - out Cap Rate is 7.75%. What is the Terminal Value
Determine the cancellation charges payable : Assuming that the flat charges for the cancellation is '100 and exchange margin is 0.10%, then determine the cancellation charges payable by the customer
What is the inflation premium : You are considering an investment in 30-year bonds issued by a corporation. The bonds have no special covenants. What is the inflation premium
How much equity does trina trikes have : Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 1.81 times at the end of 2008. How much equity does Trina Trikes have
Prepare an amortization schedule that describes the pattern : Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term
What is the net advantage to leasing : Annual maintenance costs associated with ownership are estimated at $240,000, What is the net advantage to leasing (NAL), in thousands
What is the company wacc : Debt: 9,000 6.4 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, What is the company WACC

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd