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7nadin3 [17]
3 years ago
14

1-year Treasury bill yield is 3.5%. 10-year Treasury bond yield is 4.5%. Expected rate of inflation embedded in both the Treasur

y bill and bond is 2.0%. Average yield on AAA-rated 10-year corporate bonds is 5.75%. Average yield on BB-rated 10-year corporate bonds is 8%. Liquidity premium on both Treasury bill and bond is zero. Liquidity premium on both AAA-rated and BB-rated bonds are 0.5%. What is the maturity risk premium embedded in the 10-year Treasury bond
Business
1 answer:
garik1379 [7]3 years ago
6 0

Answer: 2.5%

Explanation:

Treasury bonds have no default risk as they are backed by the U.S. government. The premiums that make up the yield are the inflation, liquidity and maturity risk premiums.

Required yield on Treasury bond = Inflation premium + Liquidity premium + Maturity risk premium

4.5% = 2% + 0% + Maturity risk premium

MRP = 4.5% - 2% - 0%

= 2.5%

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Marrrta [24]

Answer and Explanation:

The computation of the  direct labor efficiency variance is shown below;

= Standard Rate × (Standard Hours - Actual Hours)

= $22.50 × (4,760 Units × 2 hours per unit - 8,900)

= $13,950 Favourable

Hence, the direct labor efficiency variance is $13,950 favorable

We simply applied the above formula so that the correct amount could come

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3 years ago
How does unemployment rate help you determine if the economy is strong or weak
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If your unemployment rate is high, that means you're making less money in all. If many people are without jobs, that means your labor force is also weak. Your employers will make a lot of cutbacks. 
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2 years ago
How do working conditions and company's image motivate employees?
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Answer:the working conditions of the place show that it will be easier to work in and that if the company has a good image of themself then you would probably earn more money.

Explanation:

I tried the best I could.

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3 years ago
Among the guiding principles of six sigma are:
Rudik [331]

Answer:

E. I, II, and IV only

Explanation:

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8 0
2 years ago
Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (1) 3% of credit sales, (2)
Genrish500 [490]

Answer:

1.

Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $9,000

                        Allowance for doubtful accounts                                 $9,000

Working

= 3% * 300,000

= $9,000

2.

Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $12,000

                        Allowance for doubtful accounts                              $12,000

Working

= 1% * total debt

= 1% * (900,000 + 300,000)

= $12,000

3.

Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $12,500

                        Allowance for doubtful accounts                              $12,500

Working

= 6% * Accounts receivable

= 6% * 125,000

= $7,500

As the Allowance account is in debit, it means that bad debt exceeded the allowance so this balance needs to be added to properly cater for bad debts.

= 7,500 + 5,000

= $12,500

8 0
3 years ago
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