The real rate of interest has been estimated to be 4 percent, and the expected long-term...

50.1K

Verified Solution

Question

Finance

The real rate of interest has been estimated to be 4 percent,and the expected long-term annual inflation rate is 5 percent.Round your answers to the nearest whole number. Show work on excelplease
What is the current risk-free rate of return on 1-year Treasurybonds? %
If the yield on 10-year U.S. Treasury bonds is 12 percent, whatis the maturity risk premium between a 10-year bond and a 1-yearbond? %
If Delta bonds, scheduled to mature in 10 years, currently sellto yield 14 percent, what is the default risk premium on thesebonds? %
If investors in the common stock of Delta require a 15 percentrate of return, what is the seniority risk premium on Delta’scommon stock?

Answer & Explanation Solved by verified expert

3.8 Ratings (657 Votes)

What is the current riskfree rate of return on 1year Treasury bonds The current riskfree rate of return on 1year Treasury bonds real rate of interest inflation rate 4 5 9 See Answer

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!

Become a Member

Transcribed Image Text

The real rate of interest has been estimated to be 4 percent,and the expected long-term annual inflation rate is 5 percent.Round your answers to the nearest whole number. Show work on excelpleaseWhat is the current risk-free rate of return on 1-year Treasurybonds? %If the yield on 10-year U.S. Treasury bonds is 12 percent, whatis the maturity risk premium between a 10-year bond and a 1-yearbond? %If Delta bonds, scheduled to mature in 10 years, currently sellto yield 14 percent, what is the default risk premium on thesebonds? %If investors in the common stock of Delta require a 15 percentrate of return, what is the seniority risk premium on Delta’scommon stock?