Question
A particular security's default risk premium is 2 percent. For all securities, the inflation risk premium...
A particular security's default risk premium is 2 percent. For all securities, the inflation risk premium is 175 percent and the real risk- free rate is 150 percent. The security's liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. The security has no special covenants. Calculate the security's equilibrium rate of return (Round your answer to 2 decimal places.) Rate of retum
Answers
Default risk premium = 2%
Inflation risk premium = 1.75%
Real risk-free rate = 1.50%
Liquidity risk premium = 0.25%
Maturity risk premium = 0.85%
Equilibrium rate of return = 2% + 1.75% + 1.50% + 0.25% + 0.85%
Equilibrium rate of return = 6.35%
Similar Solved Questions
1 answers
You are walking from your math class to your science class carrying a book weighing 112N
You are walking from your math class to your science class carrying a book weighing 112N. You walk 45 meters down the hall, climb 4.5 meters up the stairs and then walk another 40 meters to your science class. What is the total work performed on your books....
1 answers
The DCF approach for estimated the cost of retained earnings, rs, is given as follows: s...
The DCF approach for estimated the cost of retained earnings, rs, is given as follows: s = D1/P0 + Expected gL Investors expect to receive a dividend yield, , plus a capital gain, g, for a total expected return. In -Select-recessionsequilibriumupturnItem 8 , this expected return is also equal to t...
1 answers
2. An insurance company writes a policy to the effect that an amount of money A...
2. An insurance company writes a policy to the effect that an amount of money A must be paid if some event E occurs within a year. If the company estimates that E will occur within a year with probability p, what should it charge the customer in order that its expected profit wl be 10 percent of A?...
1 answers
Please help as soon as possible ergent please i dont have any question left to post...
please help as soon as possible ergent please i dont have any question left to post if you help to answer all will be so thankful Question 12 (1 point) Which diagram best describes an aqueous solution of copper chloride (Cuci)? Water molecules are omitted for clarity matom anion cat...
1 answers
5. Calculate the approximate final temperature of water in a coffee cup calorimeter if 33.9K heat...
5. Calculate the approximate final temperature of water in a coffee cup calorimeter if 33.9K heat is added to 420.0 g of water initially at a temperature of 22.60 °C (the specific heat water is 4.184 J/g.K). 6. Determine the mass of a sample of water in a coffee cup calorimeter if the final temp...
1 answers
Sleep is very important to everyone, discuss mechanisms that regulate sleep.
Sleep is very important to everyone, discuss mechanisms that regulate sleep....
1 answers
Potassium chlorate, #KClO_3#, decomposes to form potassium chloride, #KCl# and oxygen gas. How do you write a balanced equation for this decomposition reaction?
Potassium chlorate, #KClO_3#, decomposes to form potassium chloride, #KCl# and oxygen gas. How do you write a balanced equation for this decomposition reaction?...
1 answers
Find digits A and B in the number below so the folling condition are true
Find digits A and B in the number below so the folling condition are true. The 5-digit number must be divisible by 4. The 5-digit number must be divisible by 9. Digit A cannot be the same as Digit B. 12A3BExplain the steps you followed to solve the problem....
3 answers
A 0.047 kg aluminum bullet traveling at 459 m/s strikes an armor plate and comes to...
A 0.047 kg aluminum bullet traveling at 459 m/s strikes an armor plate and comes to a stop. If all its energy is converted to heat that is absorbed by the bullet, what is the bullet's temperature change in degrees Celsius?...
1 answers
Questions 5-7 ask you to consider risky prospects Y and Z, below: Y Z ($40, 0....
Questions 5-7 ask you to consider risky prospects Y and Z, below: Y Z ($40, 0. 75; $60, 0.25) (S0, 0.40; $75,0.60) S. (10 points) Prospect Z is a mean preserving spread of prospect Y. True or False: SD(Z) > SD(Y). 6. (10 points) Jane has a concave utility of wealth function, u(x). Which of the fo...
1 answers
Match numbers 1,2,3,4,5 with a letter human Karyotype 5 N 2X45 los - Cote - —...
match numbers 1,2,3,4,5 with a letter human Karyotype 5 N 2X45 los - Cote - — 13 4 5 x х XY zban A B C D E F G JK M N ** Р R S T U V w Х Y...
1 answers
Calculate the pressure (atm) required to compress 50 ml of gas at 0.20 atm into volume of 10 ml ??
Calculate the pressure (atm) required to compress 50 ml of gas at 0.20 atm into volume of 10 ml ??...
1 answers
Spruce Inc. completed Job No. A20 during 2020. The job cost sheet listed the following: Job...
Spruce Inc. completed Job No. A20 during 2020. The job cost sheet listed the following: Job No. A20 Costs for 5000 units produced: Direct materials $30,000 Direct labor $45,000 Manufacturing overhead applied $20,000 Units sold 2,000 units How much is the cost of the finished goods on hand at the end...
1 answers
A solution containing CaCl is mixed with a solution of LICO, to form a solution that...
A solution containing CaCl is mixed with a solution of LICO, to form a solution that is 2.1 x 10 Min calcium ion and 4.75 x 10 Min Oxalate lon. What will happen once these solutions are mbed? Kp (Cac 04) - 23 x 10 Nothing will happen since calcium oxalate is extremely soluble . Nothing will happen s...
1 answers
1.) Please explain the importance of the Ficsher Esterfication reaction. 1-3 sentences will be sufficient. 2....
1.) Please explain the importance of the Ficsher Esterfication reaction. 1-3 sentences will be sufficient. 2. Which one in more soluble in water, propanoic acid or 1,3-propanedioic acid? Please explain why? 1-2 sentences will be sufficient. 1.) Name all of the functional groups that can undergo ...