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
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%

You might be interested in
The Japanese method of organizing for product design features: a. teams. b. product managers (champions). c. distinct department
Dvinal [7]

Answer:

The correct option is D, a single organization without subdivisions or individual teams.

Explanation:

Typically organizations are divided along functions and divisions.

A functional structure consists of different departments such as production,marketing ,finance.supply chain,maintenance, human resources and so on,with each function saddled with distinct responsibilities and having its own performance metrics.

Under a divisional structure, the firm is divided into division based on location or products with each division having different functions under it.

However, the Japanese method does not support divisionalization or departmentalization, instead advocated for an organization where everyone irrespective of specialty is seen as a member of a single team

8 0
3 years ago
Stealth Fitness Center issues 7%, 15-year bonds with a face amount of $200,000. The market interest rate for bonds of similar ri
Vladimir [108]

Answer:

market price of bonds = $219,597.35

Explanation:

Since the coupon rate is higher than the market rate, the bonds will be sold at a premium.

PV of face value = $200,000 / (1 + 3%)³⁰ = $82,397.35

PV of coupon payments = $7,000 x 19.600 (PV annuity factor, 3%, 30 periods) = $137,200

market price of bonds = $219,597.35

8 0
3 years ago
g When a company’s resources are valuable, rare, imperfectly imitable, and nonsubstitutable, it has a . Necessary to sustain a c
malfutka [58]

Answer:

Rare resources

Explanation:

Rare resources are unique resources that is not controlled or possessed by many competing firms. Only a small number of competing companies control it. It usually stands out by being distinctive among the set of future competitors. Rare resources are short in supply and capable of persisting over an extended time, this makes it a source of competitive advantage for a company.

7 0
3 years ago
Read 2 more answers
MBO works by objectives moving through the organization; that is, top managers set general organizational objectives, which are
vagabundo [1.1K]

Answer:

D. cascade down

Explanation:

Based on the information provided within the question it seems that this is an example of MBO working as objectives cascade down through the organization. This can be said since the organizational goals/objectives start at the top of the organization (executives and managers) and move down through the organizational hierarchy to the lower level employees. Thus cascading down.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

6 0
3 years ago
Suppose you believe that Delva Corporation's stock price is going to decline from its current level of $82.50 sometime during th
Yakvenalex [24]

Answer:

B. $1,989.75

Explanation:

Cost of option (C) = $510.25

Option selling price (Po) = $85 per share

Share price when selling (Ps) = $60 per share

Number of shares (n) = 100 shares

Since the option allows you to sell shares that are valued at $60 for at $85 each, by selling 100 shares, your total earnings are:

E=(P_o-P_s)*n\\E=(\$85-\$60*)100\\E=\$2,500

To find the pre-tax net profit (P), subtract the amount paid for the options from your earnings:

P=E-C= \$2,500-\$510.25\\P=\$1,989.75

6 0
4 years ago
Other questions:
  • Identify three economic activities that are replacing shifting cultivation
    10·1 answer
  • According to the job characteristics model, _____ refers to the job characteristic that reflects the degree to which a job allow
    15·1 answer
  • If the central bank wants to expand aggregate demand, it can ________ the money supply, which would ________ the interest rate.i
    9·1 answer
  • d)The owner of a cemetery plans to offer a perpetual care service for grave sites. The owner estimates that it will cost $150 pe
    12·1 answer
  • Suppose that increases in the money supply lead to a rise in stock prices. Does this mean that when you see the money supply has
    12·1 answer
  • Deng Xiaoping would most likely agree that. . free enterprise can boost a nation's economy. . free enterprise has no place in a
    8·1 answer
  • 5. Which is an external users of accounting?
    11·1 answer
  • Which of the following is a primary benefit of entrepreneurial competition?
    14·1 answer
  • Harlon accounts for its equity investment portfolio at fair value through net income. Harlon sold its holdings of A Corporation
    9·1 answer
  • A career path that involves horizontal movement within or across organizations is referred to as a(n) _____.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!