1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
podryga [215]
1 year ago
9

A company’s 5-year bonds are yielding 7% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the rea

l risk-free rate (r* ) is 2.75%. The average inflation premium is 2.05%, and the maturity risk premium is estimated to be 0.1 3 (t 2 1)%, where t 5 number of years to maturity. If the liquidity premium is 0.7%, what is the default risk premium on the corporate bonds
Mathematics
1 answer:
hichkok12 [17]1 year ago
6 0

Based on the required rate of return, the real risk free rate, and the inflation premium, the default risk premium on the corporate bonds is 1.2%

<h3>How is the default risk premium found?</h3>

The default risk premium can be found as:

=real risk free rate + Inflation premium + default risk premium + liquidity premium + maturity risk premium

Solving gives:

= 0.07 - 0.0275 - 0.0205 - (0.1 x (t - 1)%)

=  0.07 - 0.0275 - 0.0205 - (0.1 x (5 years - 1)%)

= 1.2%

The default risk premium refers to the return that the bond is offering over what a risk-free bond would offer.

This means that the corporate bond described is offering 1.2% more than what a risk-free government bond would offer.

Find out more on default risk premium at brainly.com/question/8873408

#SPJ1

You might be interested in
Find the present value of the annuity.
shusha [124]

Pv=4,725×((1−(1+0.10÷2)^(−2
×15))÷(0.10÷2))=72,634.83
6 0
3 years ago
Given g(x)=3x+6 on what interval is the function negative
iris [78.8K]

Step-by-step explanation:

A number that is negative is less than 0, so

3x + 6 < 0

3x <  - 6

x <  - 2

So this function is negative, when x is less than -2

4 0
2 years ago
Read 2 more answers
Much like sound bites of news​ stories, statistical studies are often reduced to​ one- or​ two-sentence "stat-bites." For the​st
Ira Lisetskai [31]

Answer:

Step-by-step explanation:

Given that According to a video streaming​ service, 48% of American couples are​ "cheaters", that is—they promise each other to watch a film​together, but one of them first watches it alone.

Here if this is binomial with two outcomes we can easily say that the other 52% couples go together movies.

But here there are not only two outcomes.

The other possibilities are:

i) Either both do not go to movies

ii) Both cheat and go to movies separately

Thus since there are not exactly two outcomes, we cannot say the other 52% go to movies together.

As much as say that 52% of couples are not cheating in this way.

8 0
3 years ago
What equation best represents y, the number of hours mr Moore will be charged should be charged for renting x hours?
RideAnS [48]
The answer to your Q i think is xyz?
7 0
3 years ago
Read 2 more answers
Twenty-four students brought their permission slips to attend the class field trip to the local art museum. If this represented
lukranit [14]
If 24 students went on a field trip, and 24 students represented eight tenths of the class, then 24 =  \frac{8}{10}x.
First, multiply by 10 on both sides.
240 = 8x
Divide by 8 on both sides.
x = 30.

The class has 30 students in all.
This is, however, only the equation way to solve. 
7 0
3 years ago
Other questions:
  • Jayne stopped to get gas before going on a road trip. The tank already had 4 gallons of gas in it. Which of the statements below
    12·2 answers
  • Given the function ƒ(x) = 5x2 − 9x + 18, find ƒ(3).
    14·1 answer
  • Which is bigger 1.9 or 1 3/8
    13·2 answers
  • 1. TRIATHLON The course for a local
    13·1 answer
  • Subtract. (2 + 5i) – (4 – 2i)
    14·2 answers
  • 3x - 5 = 1/2x + 2x solve the equation and please show your work im confused
    14·1 answer
  • He perimeter of the figure is given. Find the length of the indicated side.
    13·1 answer
  • If a map key says that 1" = 12 miles, how many miles are represented by 3.2"?
    10·1 answer
  • Find the exact value.
    10·1 answer
  • Caden owns 9 white t-shirts and 9 t-shirts in other colors ? If Caden randomly selects a t-shirt to wear, what is the probabilit
    8·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!