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Nadya [2.5K]
3 years ago
9

A particular security's default risk premium is 2 percent. for all securities, the inflation risk premium is 1.75 percent and th

e real risk-free rate is 3.5 percent. the security's liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. the security has no special covenants. calculate the security's equilibrium rate of return.
Mathematics
1 answer:
larisa [96]3 years ago
6 0
To solve this problem and calculate the security's equilibrium rate of return, you should sum<span> the security's default risk premium (2.00%),</span> the inflation risk premium (1.75%), the real risk-free rate (3.50%), the security's liquidity risk<span> premium (0.25%) </span><span>and the maturity risk premium (0.85%). So, you have:
 
 ij*=2.00%+1.75%+3.50%+0.25%+0.85%
</span> ij*=8.35%<span>
</span>
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Clarke borrows $16000 to buy a car he pays simple interest at an annual rate of 6% over a period of 3.5 years how much does he p
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<span>Clarke borrows $16000 to buy a car he pays simple interest at an annual rate of 6% over a period of 3.5 years how much does he pay all together?
Let’s calculate
=> 16 000 dollars is the amount he borrowed
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=> 3.5 years us the total years that he will be paying it.
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1 year ago
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