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Kay Corporation's 5-year bonds yield 6.20% and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5-year bonds is IP = 1.50%, the default risk premium for Kay's bonds is DRP = 1.30% versus zero for T-bonds, 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 liquidity premium (LP) on Kay's bonds?
a. 0.36%b. 0.50%c. 0.45%d. 0.41%e. 0.55%
Describe the computation of NPV for foreign projects. Explain how to choose currency conversion methods (ie, spot vs forward rates) and domestic or host country interest rates in determining the proper discount rates.
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The real risk-free rate is 4%. Inflation is expected to be 3% this year, 5% next year, and then 5% thereafter. The maturity risk premium is estimated to be 0.0003 x (t - 1), where t = number of years to maturity. What is the nominal interest rate ..
At my work, I support a particular group of people with back up assistance of a consultant from a third party supplier. This third party supplier backs me up as well as a colleague of mine who supports an entirely separate group of customers.
Please give a written summarization on article "Time is Money" by Emily Oster. What is the take away of article?
Suppose you are planning three stocks with the following expected dividends yields and gains, Determine the expected return on a portfolio consisting of 40% in stock A and 60 % in stock B
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