DEFAULT RISK PREMIUM The real risk-free rate, r, is 1.65%. Inflation is expected to average...
50.1K
Verified Solution
Link Copied!
Question
Finance
DEFAULT RISK PREMIUM The real risk-free rate, r, is 1.65%. Inflation is expected to average 2.75% a year for the next 4 years, after which time inflation is expected to average 3.85% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 11.15%, which includes a liquidity premium or 0.55%. What is its default risk premium? Do not round Intermediate calculations. Round your answer to two decimal places. % we Future interest Rates EXPECTATIONS THEORY One year Treasury securities vield 3.05%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6.3%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places %
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.