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Real Risk-Free Rate
You read in The Wall Street Journal that 30-day T-bills are currently yielding 4.5%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:
Inflation premium = 3.25%
Liquidity premium = 0.8%
Maturity risk premium = 1.4%
Default risk premium = 2.6%
On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places.
What is the nominal interest rate on a 7-year Treasury security? Round your answer to two decimal places.
Discuss the topic of scarcity using Opportunity costs, Trade-offs and Factors of production.
What is the financial break-even point for the project? (Do not round intermediate calculations and round your final answer to nearest whole number.
Management is considering issuing $50,000 of debt at an interest rate of 7 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares can the firm repurchase if it issues the debt securities?
How much dividend income will you receive on September 1 as a result of your ownership of Wagoneer stock?
If they receive an A rating, the yield to maturity on similar A bonds is 10.5%. What will be the price of the bond if it receives and AA rating? An A rating? (Show would as well as answers)
If its average age of inventory is 52 days, how long is its average collection period? If its average payment period is 38 days, what is its cash conversion cycle? How long is Sharam's average collection period?
A 5-year corporate bond has the same defult risk premium ans liquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond?
The firm had no amortization charges. What was the EBITDA coverage ratio?
whythe results are different at the different interest rates.
Fifteen years ago, John set aside $100,000 in case of a financial emergency. Today, that account has increased in value to $257,184. What rate of interest is the he earning on this money.
In addition, the underwriter charges $600,000 in legal fees. On the first day of trading, the firm's stock closed at $61. What were the total costs of the issue?
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