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
Volgvan
3 years ago
14

According to the liquidity premium theory of the term structure of interest rates, if the one-year bond rate is expected to be 4

%, 5%, and 6% over each of the next three years, what is the interest rate on a three-year bond if the liquidity premium on a three-year bond is 0.5%
Business
1 answer:
KatRina [158]3 years ago
4 0

Answer:

Interest rate on the a three year bond =5.5%

Explanation:

one-year bond rate expected = 4%, 5%, 6% for the next three years

liquidity premium on a three year bond = 0.5%

number of years = 3

The interest rate on the a three year bond can be calculated as

= liquidity premium + ( summation of bond rates for the next three years/number of years )

= 0.5 + ( (4+5+6)/3)

= 0.5 + ( 15/3)

= 0.5 + 5  = 5.5%

You might be interested in
On January 1, JC Co. accepted a 60-day, 6%, note in the amount of $10,000 from a customer. On March 2, the due date of the note,
sammy [17]

Answer:

Cash account in the amount of $10,100

Explanation:

The journal entry to be recorded for the receipt of payment is as:

Cash A/c.............................................Dr $10,100

        Note receivable A/c...................Cr  $10,000

        Interest Revenue A/c..................Cr  $100

Being recoded the receipt of payment

As payment is received so asset is increasing and any increase in asset is debited. Therefore, cash account is debited. And the note receivable got decrease will be credited and the interest revenue is also credited.

Computation of interest revenue is as:

Interest revenue = Amount × % of note × Days / Number of days in a year

= $10,000 × 6% × 60 / 360

= $100

Note: Assume 360 days in a year

3 0
3 years ago
Would the outcome have been different if the roles of board chairman and CEO in BP had been combined, as in many large American
hram777 [196]

\huge \text{Answer:}

In many companies, the chief executive officer (CEO), who holds the top management position in the company, also serves as chairman of the board. This is often the case with companies that have grown rapidly and still retain the initial founder in those roles.

8 0
3 years ago
How does a software developer differ from a computer programmer?
yan [13]

Answer:

D. A software developer requires leadership skills.

Explanation:

A computer programmer takes care of writing code to create a program.

A software developer takes care of all the process for developing a software and they will define the requirements for a software and then, work with programmers that write the code.

According to that, a software developer differ from a computer programmer because a software developer requires leadership skills as they will have to supervise all the process to create a program and work with people.

8 0
3 years ago
A portfolio with a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%. This portfolio had
jarptica [38.1K]

Answer: 0.3

Explanation:

The Sharpe ratio is simply used by organizations and investors in order to compare the return on an investment to its risk.

From the question, we are informed that a portfolio has a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%.

The Sharpe ratio will be:

= (15% - 6.0%)/30%

= 9%/30%

= 0.09/0.3

= 0.3

4 0
3 years ago
A ________ state is one with unstable leadership, whose policies are driven by ideology rather than by economic or human costs a
stepan [7]

A rogue state is one that has unstable leadership and the policies are driven by ideologies instead of economic costs or benefits.

<h3>What is a state?</h3>

A state is a territory that belongs to one country. It is having its own government which runs that particular state or province.

A rogue state is a kind of state which is responsible for shattering and disrupting global laws and is also considered a danger to other countries or nations in the whole world. North Korea, Libya, Iran, Iraq, and Cuba are labeled as rogue states. These states are not driven by an economy and are actually driven by the ideologies developed by their presidents.

Therefore, the state is driven by ideologies instead of an economy that is considered to be a rogue state.

Learn more about the rogue state in the mentioned link:

brainly.com/question/3500231

#SPJ1

7 0
2 years ago
Other questions:
  • You purchased 200 shares of ABC stock on July 15th. On July 20th, you purchased another 100 shares and then on July 22st you pur
    6·1 answer
  • Page Up and Page down fall in the _______ keys category
    12·1 answer
  • Which of the following is an example of a realistic job preview (RJP)? Check all that apply. a) When Mary has her first intervie
    15·1 answer
  • ne of the most important components of stock valuation is a firm’s estimated growth rate. Financial statements provide the infor
    13·1 answer
  • Jefferson County bought a new backhoe using General Fund cash. When the asset was acquired, what was the appropriate entry that
    15·1 answer
  • Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfoli
    7·1 answer
  • Sean, Pete, Tom, and Mark formed a partnership to start a water damage restoration business. Each partner has a 25% interest, an
    9·1 answer
  • 重
    7·1 answer
  • NO LINKS OR ELSE YOU'LL BE REPORTED! Only answer if you're very good at drawing logos.
    15·1 answer
  • Johan is a 25-year-old, single taxpayer with modified adjusted gross income of $18,500. During Tax Year 2020, he made a $2,000 c
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!