All categories

3 years ago

the spread between the interest rates on bonds with default risk and default-free bonds is called the:

Business

1 answer:

jeka57 [31]3 years ago

5 0

The spread between the interest rates on bonds with default risk and default-free bonds is called the risk premium.

A default-free bond is a bond in which the bond issuer would not miss scheduled payments of either the coupon or principal. Bonds issued by the government are generally considered to be default-free. This is because the government can print money to make payments.

A bond with a default risk is a bond in which the bond issuer can miss scheduled payments of either the coupon or the principal. Bonds issued by private individuals are generally considered to be bonds with default risk.

Bondholders usually demand a compensation for holding bonds with a default risk. This compensation is known as risk premium.

Risk premium = return on bonds with default risk - return on default- free bond.

To learn more, please check: brainly.com/question/4304080?referrer=searchResults

You might be interested in

Which option in a webmail program allows you to type a new message? The option allows you to create a new message. NextReset

mixas84 [53]

Answer:

The "compose" or "draft" option allows you to type a new message.

3 0

3 years ago

Bob has a $50,000 stock portfolio with a beta of 1.2, an expected return of 10.8%, and a standard deviation of 25%. Becky also h

4vir4ik [10]

Answer:

Combined Beta = 1

Combined return = 10%

Explanation:

given data

stock portfolio = $50,000

beta = 1.2

expected return = 10.8%

beta = 0.8

expected return = 9.2%

standard deviation = 25%

to find out

combination

solution

we get here first Combined Beta that is express as

Combined Beta = 1.2 × 50% + 0.8 × 50%

Combined Beta = 1

and

Combined return will be here

Combined return = 10.8 × 50% + 9.2 × 50%

Combined return = 10%

5 0

3 years ago

Which financial institution is known as a cooperative association?

Serhud [2]

Answer:

Credit Unions is known as a cooperative association.

hope it helps!

5 0

3 years ago

Brian Vargo, an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour, is: a. not

malfutka [58]

a. not counted as part of the labor force

8 0

3 years ago

Suppose that you have just borrowed $200,000 using a 20-year loan with an annual interest rate of 10% arxl monthlypaymentsandmon

lapo4ka [179]

Answer: $1666.67

Explanation:

Given from the question

Principal (P) = $200,000

Rate= 10%

Time= 20years

The interest (I) on the first payment is the extra money that is to be paid in addition to the principal borrowed.

The interest for the first year has the formula:

I = (P×R) ÷ 100

I= (200000×10) ÷100

I = $20,000

Therefore the extra amount to be paid on the loan of $200,000 that increases at a rate of 10% for the first year would be $20,000.

The interest compounds monthly therefore, the payment on the first month would be

First Month Interest= 20,000÷12

=$1666.67

Therefore the part of the first payment that would be interest is $1666.67.

4 0

3 years ago