Interest premium Estimate the default premium and the maturity premium given the following three investment opportunities: a Treasury bill with a current interest rate of

 

3%; a Treasury bond with a twenty-year maturity and a current interest rate of 5%; and a AAA, corporate bond with atwenty-year maturity and an interest rate of 8%.

What is the default premium?

enter your response here%

(Round to two decimal places.)

8. Inflation, nominal interest rates, and real rates. From 1991 to 2000, the U.S. economy had an annual inflation rate of around 2.87%. The historical annual nominal risk-free rate for this same period was around 6.48%. Using the approximate nominal interest rate equation and the true nominal interest rate equation, compute the real interest rate for that decade.

What is the estimated real interest rate using the approximate nominal interest rate equation for that decade?

enter your response here%

(Round to two decimal places.)

7. Inflation, nominal interest rates, and real rates. estimate the real rate with the approximate nominal interest rate equation and the true nominal interest rate equation (Fisher effect) for each set of nominal and inflation rates.

(Click on the following icon

in order to copy its contents into a spreadsheet.)

Nominal Rate	Inflation Rate	Approximate Real Rate	True Real Rate
14.0%		7.0%		?		?
10.0%		3.0%		?		?
18.0%		12.0%		?		?
4.0%		8.0%		?		?

First, fill in the approximate real interest rate in the following table: (Round to two decimal places.)

Nominal Rate	Inflation Rate	Approximate Real Rate
14.0%		7.0%		enter your response here%

6. Amortization schedule with periodic payments. Moulton Motors is advertising the following deal on a used Honda Accord: "Monthly payments of $252.18 for the next

48 months and this beauty can be yours!" The sticker price of the car is $9,400.

If you bought the car, what interest rate would you be paying in both APR and EAR terms? What is the amortization schedule of the first six payments?

need help with this one

Prepare the amortization schedule for the first six payments of this car loan. What is the interest expense of the loan in month 1?

(Round to the nearest cent.)

5. Amortization schedule with periodic payments. Moulton Motors is advertising the following deal on a new Honda Civic: "Monthly payments of $500.34 for the next 48 months and this beauty can be yours!" The sticker price of the car is $19,000. If you bought the car, what interest rate would you be paying in both APR and EAR terms? What is the amortization schedule of the first six payments?

If you bought the car, what monthly interest rate would you be paying?

1.01.0%

(Round to four decimal places.)Part 2If you bought the car, what annual percentage rate (APR) would you be paying?

12.0012.00%

(Round to two decimal places.)Part 3If you bought the car, what effective annual rate (EAR) would you be paying?

12.7012.70%

(Round to two decimal places.)

Part 4Prepare the amortization schedule for the first six payments of this car loan. What is the interest expense of the loan in month 1?

need help with this one

(Round to the nearest cent.)