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Alenkasestr [34]
3 years ago
14

The government issues a Treasury Note with a real risk-free rate is 3.5%, and inflation is expected to be 2% for the next 3 year

s. A 2-year Treasury note yields 6.7%. What is the maturity risk premium for the 3-year security? *
​
Business
1 answer:
ankoles [38]3 years ago
7 0

Answer:

1.2%

Explanation:

Maturity risk premium is extra return that an investor receives on investment in the bonds with longer maturity. It is offered to the investors in order to compensate the risk faced by them due to longer period to maturity.

Formula for the risk premium

Maturity risk premium = Treasury note yield - Real risk-free rate - Inflation

As per given data

Treasury note yield = 6.7%

Real risk-free rate = 3.5%

Inflation = 2%

Placing values in the formula

Maturity risk premium = 6.7% - 3.5% - 2%

Maturity risk premium = 1.2%

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Answer:

a) What is the expected transaction price with variable consideration estimated as the expected value?

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  • bonus price for finishing 2 weeks earlier $5,800 x 1.25 = $7,250 (25% probability)
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Adirondack Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead ra
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The factory overhead allocated per unit of Product A in the Painting Department is $ .

Given,

                             Overhead       Total direct       DLH per product

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Painting dept.       $241000        10500                       8          11

Finishing dept.      $69700         10500                       5           6

Totals                     $311400        21000                       13         17

Single overhead rate per hour = total overheads/ total labor hours

Now, substituting the values in the formula

Single overhead rate per hour = 311400/21000

                                                   = $14.83 per labor hour

Now, direct labor hours for product A for the Painting department  = 16 hours

Overhead rate per unit of product A in the painting department = 16 hours × $14.83 per hour

Overhead rate = $237.28 per unit

Thus, Adirondak Marketing Inc. would allocate $237.28 to the painting department for 1 unit of Product A.

Learn more about factory overhead:

brainly.com/question/26082424

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