Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the real risk-free rate, r*, is 1.7%. inflation is

The real risk-free rate, r*, is 1.7%. Inflation is expected to average 1.5% a year...

80.2K

Verified Solution

Question

Finance

The real risk-free rate, r*, is 1.7%. Inflation is expected to average 1.5% a year for the next 4 years, after which time inflation is expected to average 4.9% a year. Assume that there is no maturity risk premium. An 11-year corporate bond has a yield of 8.5%, which includes a liquidity premium of 0.3%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places.

Answer & Explanation Solved by verified expert
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: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

the number of the cycle made by mass per unit time means c) frequency b)...

Algebra
Q

The demand for roses was estimated using quarterly figures for the period 1971 (3rd quarter) to...

Advance Math
Q

1(i) Show, if (X, d) is a metric space, then d∗ : X × X...

Advance Math
Q

Find the derivative of f x cot 2x4 10x O f x csc 8x 10...

Calculus
Q

6 3 x 2

Algebra
Q

The equity accounts of Gina's Corp total $3,000,000. Mickey's Corp purchases 75% of Gina's Corp...

Accounting
Q

The following information is available for Metlock, Inc. for the year ended December 31, 2022....

Accounting
Q

Problem 5.(20 pts). Cost. Volume Profit Analysis Please type your answers in the blue box...

Accounting
Q

On July 1, 2022. Timothy Company acquired a 70 percent interest in Benjamin Company in...

Accounting
Q

2301110.209 ASR NSB CP5 QUESTION 27: TAX EFFECT ACCOUNTING Spark...

Accounting
Q

This Question: 1 pt Select the reason(s) for using standard costs O A. pricing decisions...

Accounting
Q

QUESTION 28 If you were to compare a short term bond and a long time...

Finance