Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you are considering an investment in 30-year bonds

You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have...

90.2K

Verified Solution

Question

Finance

You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that one-year T-bills are currently earning 1.25 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds:

Real risk-free rate = 0.75%

Default risk premium = 1.15%

Liquidity risk premium = 0.50%

Maturity risk premium = 1.75%

a.) What is the inflation premium?

b.) What is the fair interest rate on Moore Corporation 30-year bonds?

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: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Physics
1.2K views

A force of 10 N making an angle 30 with positive x axis acts on...

Calculus
1.2K views

In parts a f use the given figure a Solve f x 18 b Solve...

Calculus
1.2K views

Question Provide your answer below 0 in x The figure above shows a right triangle...

Algebra
1.2K views

Find an equation of the line that contains the points listed in the following table...

Algebra
1.2K views

Graph the solution set of the inequa 7 x22

Accounting
1.2K views

3 Wehrs Corporation has received a request for a special order of 8,800...

Accounting
1.2K views

will rate answer! Thank you!! :) Dividends on Preferred and Common Stock Pecan...

Accounting
1.2K views

On March 1, 2018 the Santa Teresa Glass Company borrowed $600,000 from Finance Bank and...

Accounting
1.2K views

Assume that at the beginning of the current year, a company has a net gain-AOCI...

Accounting
1.2K views

Which of the following methods of joint cost allocation serves the purpose of product costing?...

Accounting
1.2K views

Exercise 6-21(Algo) Complete the accounting cycle using inventory transactions (L06-2,6-3,6-5,6-6,6- On January...

Accounting
1.2K views

don't understand this. Last year [year 1], we decided to drop our highest-end Red model...