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The real risk free rate of interest r*, is 3% and it is expected to remain constant over time. Inflation is expected to be 2% for the next 3 years and 4% for the next 5 years. The maturity risk premium isequal to 0.1 (t-1)%, where t=the bond's maturity. The default risk premium for a BBB-rated bond is 1.3%.
a) What is the average expected inflation rate over the next 4 years?b) What is the yield on a 4-year Treasury bond?c) What is the yield on a 4-year BBB-rated corporate bond with a liqidity premium of 0.5%?d) What is the yield on an 8-year Treasury bond?e) What is the yield on and 8-year BBB-rated corporate bond with a liquidity premium of 0.5%?f) If the yield on a 9-year Treasury bond is 7.3%, What does that imply about expected inflation in 9-years?
When you examine the expenses of the mutual funds, you will notice that this fund also has the highest expenses. Does this affect your decision to invest in this fund.
Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these 3 accounts?
The Green Balloon issued 20-year zero coupon bonds 4 years ago. Currently, these bonds are selling at 32.8 percent of face value of $1,000. The tax rate is 35 percent.
Computation of the weighted average cost of capital and What is the weighted average cost of capital of the firm
Suppose Conch Republic loses sales on other models because of the introduction of the new model. How would this affect your analysis?
How large of a sales increase can the company achieve without having to raise funds externally? Round your answer to the nearest cent.
Computation of gain or loss on sale of investments and Journal entries to record purchase & sale of company's Common & Treasury stocks
One year spot rate is 6%, 2nd year forward rate is 7.5% and 3rd year forward rate is 12.3%. Assume liquidity premium for the second year is 0.5% and three year fixed rate is 9%. What is the liquidity premium for the third year?
Red, Inc., Yellow Corporation, and Blue firm each will pay a dividend of $2.85 next year. The growth rate in dividends for all three firms is 5%.
Computation of revenue on hedging of an investment and it must decide whether to use options or a money market hedge to hedge this position
You are saving money to buy a car. if you save 310 per month starting one month from now at an interest rate of 9%, how much will you be able to spend on the car after saving for 4years?
The old phrase, "The bigger they are, they harder they fall," describes perfectly what happened to the US auto industry during the first 10 years of this century.
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