subject
Business, 14.06.2021 15:10 ellie55991

A 5-year Treasury bond has a 2.10% yield. A 10-year Treasury bond has a 3.75% yield. A 10-year corporate bond has a 7.25% yield. The market expects that inflation will average 2.5% over the next 10 years (IP10 = 2.5%). The maturity risk premium is equal to 0.1/t =1%, where t = the number of years at the band's maturity. Assume that the annual Leal risk-free rate of interest..will remain constant over the next 10 years, a. What does the market expect that inflation will average over the next five years? b. A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described above. What is the yield on this 5-year corporate bond?

ansver
Answers: 1

Another question on Business

question
Business, 20.06.2019 18:02
Harley davidson stores sell merchandise which attract people who love motorcycles and the idea of an open road and freedom. some are bikers and others are those who do not have a harley davidson motorcycle but buy the hd logo apparel and accessories. therefore, harley davidson is using as the scheme for market segmentation.
Answers: 2
question
Business, 21.06.2019 21:00
While studying for the engineering economy final exam, you and two friends find yourselves craving a fresh pizza. you can't spare the time to pick up the pizza and must have it delivered. "pick-up-sticks" offers a 1-1/4-inch-thick (including toppings), 20-inch square pizza with your choice of two toppings for $15 plus 5% sales tax and a $1.50 delivery charge (no sales tax on delivery charge). "fred's" offers the round, deep-dish sasquatch, which is 20 inches in diameter. it is 1-3/4 inches thick, includes two toppings, and costs $17.25 plus 5% sales tax and free delivery. 1. what is the problem in this situation? state it in an explicit and precise manner. 2. systematically apply the seven principles of engineering economy (pp. 3-6) to the problem you have defined in part (a). 3. assuming that your common unit of measure is dollars (i.e., cost), what is the better value for getting a pizza based on the criterion of minimizing cost per unit of volume? 4. what other criteria might be used to select which pizza to purchase?
Answers: 3
question
Business, 22.06.2019 09:40
Salt corporation's contribution margin ratio is 78% and its fixed monthly expenses are $30,000. assume that the company's sales for may are expected to be $89,000. required: estimate the company's net operating income for may, assuming that the fixed monthly expenses do not change.
Answers: 1
question
Business, 22.06.2019 13:00
Amajor advantage of case studies is
Answers: 2
You know the right answer?
A 5-year Treasury bond has a 2.10% yield. A 10-year Treasury bond has a 3.75% yield. A 10-year corpo...
Questions
question
History, 18.08.2019 14:30
Questions on the website: 13722367