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Svetradugi [14.3K]
3 years ago
14

Pandar Corp. issues 12-year, AA-rated bonds. What is the yield on one of these bonds? Disregard cross-product terms; that is, if

averaging is required, use the arithmetic average.
Business
1 answer:
Alecsey [184]3 years ago
8 0

Answer:

8.58%

Explanation:

risk free rate 2.8%

premiums on Pandar Corp.'s bonds:

  • maturity risk premium = 0.1 x (12 - 1)% = 0.1 x 11% = 1.1%
  • liquidity premium on Pandar Corp.'s bonds = 0.55%
  • default risk premium for AA bonds = 0.80%
  • inflation premium (assuming 4% inflation for first 4 years and 3% for the rest of the years) = (4% x 4/12) + (3% x 8/12) = 3.33%

total premiums on Pandar Corp.s' bonds = 5.78%

yield on Pandar Corp-'s bonds = risk free rate + premiums = 2.8% + 5.78% = 8.58%

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Ideally, the drunk driver who hit them while he was driving on the wrong lane is liable for the damages and not McLaughlin since he was sober and civil.

Explanation:

Liability for damages resulting from car accident usually falls on a negligent driver an din this case, McLaughlin is not the negligent one.

However, the situation is tricky here since he is not the owner of the car.

The majority of car accidents are caused by driver negligence, poor road conditions, or a problem or defect with one of the automobiles involved.

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3 years ago
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Answer:

Explanation:

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