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ICE Princess25 [194]
3 years ago
7

5-year Treasury bonds yield 5.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4

%. What is the real risk-free rate, r*? 3.87% 3.52% 3.20% 2.88% 2.59%
Business
1 answer:
tangare [24]3 years ago
7 0

Answer:

option 3.20%

Explanation:

0.055-0.019-0.004 =0.032 = 3.20%

The inflation premium is added to the real risk-free rate as well to the maturity risk premium

A no risk rate would be 3.2

because there is a certain change for inflation a premium is added, also another premium is added to prevent investor to purchase the bond on a lower price.

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Recently the corporate tax law in the U.S. changed so that firms that previously faced a marginal tax rate of close to 40% now p
garri49 [273]

Answer:

a.) increased the after-tax cost of debt

Explanation:

Missing options are:

a.) increased the after-tax cost of debt

b.) did not change the after-tax cost of debt

c.) increased the value of the deduction for interest expense

d.) decreased the after-tax cost of debt

The after tax cost of debt is calculated by multiplying the debt's principal x interest rate x (1 - tax rate). If the tax rate decreases, the after tax cost of debt increases. e.g.

$1,000 owed at 6%, when tax rate was 40% ⇒ after tax cost of debt = $1,000 x 6% x (1 - 40%) = $36 or 3.6%

now, $1,000 owed at 6%, when tax rate is 21% ⇒ after tax cost of debt = $1,000 x 6% x (1 - 21%) = $47.40 or 4.74%

4 0
3 years ago
The process of preventing exceptions from causing runtime errors is called
Molodets [167]
The process of preventing exceptions from causing runtime errors is called exception handling.
This type of handling deals with exceptions in particular, which are all anomalies that will prevent the computer from doing its usual job. So those exceptions will be handled even before they get the chance to cause errors which will disturb the operations that the computer is carrying out. 
4 0
3 years ago
If a borrower's monthly interest payment on an interest-only loan at an annual interest rate of 7.3% is $877, how much was the l
mihalych1998 [28]

Answer:

$144,200

Explanation:

7 0
2 years ago
Which method is the most efficient method to use to solve x^2+6x-7=0?
sweet-ann [11.9K]
(x+7)(x-1) = 0 ^x^2 + 6x - 7 = 0x               7x              -1
Its really easy if you think it this way.

7 0
3 years ago
Read 2 more answers
Gary is the marketing manager for an automobile dealership his boss tells him the firm's primary goal is
Eduardwww [97]

Answer:

sales orientation

Explanation:

It seems that in this scenario the firm is using a sales orientation. This is a business approach that focuses on improving the company's products or services without taking the actual needs of the customers into consideration. In order to make as many sales as possible which ultimately increases the company's market shares.

3 0
3 years ago
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