User Account

All Pages

What is the inflation premium on 5-year bonds

Assignment Help Financial Accounting
Reference no: EM133234359

The Gergen Group's 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* = 3.9%, the default risk premium for Gergen's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Gergen's bonds is LP = 1.25%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) × 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on 5-year bonds?

Reference no: EM133234359

Questions Cloud

Hhow the knowledge gained during the course : Choose 2 of the concepts from this course (PV, FV, NPV, IRR, Cashflows) and explain how you are going to apply them in the future (it can be your personal life,
Fair market value of property : Kase, an individual, purchased some property in Potomac, Maryland, for $150,000 approximately 10 years ago. Kase is approached by a real estate agent representi
Reviewing porter five forces of competitive position : After reviewing Porter's Five Forces of Competitive Position Analysis in this week's lecture, use the five forces to evaluate the competitive landscape of TESLA
Prepare a statement of stockholders equity : The following is selected financial information for Zingles, Inc. for its year ending January 31, 2016:
What is the inflation premium on 5-year bonds : The Gergen Group's 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* = 3.9%, the default risk premium for Gergen's bonds i
How much would be in the account after 8 months : Suppose you deposited $18,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be in the account after 8 months,
How much is par value per share of burn ordinary shares : Burns co. issued 20,000 ordinary shares in exchange for all the outstanding shares of sighing, inc. on acquisition date, sighings net identifiable assets have a
Information into journal entry : In Accounting when do you input information into Journal Entry? Is it when you get a invoice or receipt? where does the information come from to input the infor
Evaluate investment using several methods : Prompt: Why should a leader evaluate an investment using several methods or analysis tools before making a decision? What specific risks might a leader take by

Reviews

Write a Review

Financial Accounting Questions & Answers

  Describe corporate espionage

Describe Corporate Espionage. Define at least three ways to prevent it.

  Prepare the journal entries to record retirement of williams

Prepare the journal entries to record the retirement of Williams under Williams sells one-third of his interest to Weston for $37 500 and two-thirds to Ward

  What is the portfolio beta for john

$116,513 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 2 and Y's beta is 0.7. What is the portfolio's beta?

  What is the present value of the debt tax shield

What is the present value of the debt tax shield if the debt has no maturity and if Lodh Ltd is subject to a 30 per cent company tax rate?

  What are the warranty expense balance

Lightning Appliances sells dishwashers for $ 1,200 each, Using the cash basis method, what are the Warranty Expense balances for 2020 and 2021?

  Total interest expense equal to the cash interest payments

Adams, Corp., is planning to issue $520,000 of 6%, five-year bonds payable to borrow for a major expansion. The chief executive, Shane Adams, asks your advice on some related matters. At what type of bond price will Adams have total interest expense ..

  What is an audit

What is an audit? Why is an audit so often considered to be the final phase of a budgetary process?

  Which may be considered an operating segment

Which may be considered an operating segment? What is the function of the chief operating decision maker? Who could be the chief operating decision maker?

  The president of the corporation is not convinced that

the president of the corporation is not convinced that interest expense should be excluded from the evaluation of the

  What is the compound annual rate implied

You can borrow $500 today and repay $575 in two weeks. What is the compound annual rate implied by this 15 percent rate charged for only two weeks

  Calculate the current yield of each bond

Calculate the current yield of each bond. Is this the total return that you would earn each year? If you were on fixed income, would you care about this number

  Elucidate a cost of goods sold section for the year ending

The ending merchandise inventory is $25,000. Elucidate a cost of goods sold section for the year ending August 31 (periodic inventory.

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: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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