Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 24, 2024

The coupon rate of a BHP 10 year bond is 8%. The maturity-risk premium and liquidity-risk premium are both 50 basis points. Inflation is 1.5%

The coupon rate of a BHP 10 year bond is 8%. The maturity-risk premium and liquidity-risk premium are both 50 basis points. Inflation is 1.5% and 10 year government bonds are yielding 3%.

What is the default-risk premium?

A 2%

B 2.5%

C 3% D 3.5% E 4%

The answer is 2.5% but I need to know how to work it out

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Multinational Management

Authors: John B. Cullen

6th edition

1285094946, 1285094948, 9781285696744 , 978-1285094946

Students also viewed these Finance questions

Question

★★★★★

Explain the difference in the percentages of the products in these two hydroborationreactions: CH3 CH, QH CH, 1) BH3. THF 2) H,O,, NAOH CH,CH-CHCH-CH; + CH;CHCH,CHCH3 (43%) CH,CHCH=CHCH, (57%) 1)...

Answered: 1 week ago

Question

★★★★★

=+b) Find the standard deviations.

Answered: 1 week ago

Question

★★★★★

As financial manager of Britwell Inc., you are investigating a possible acquisition of Salome. You have the basic data given in the following table. You estimate that investors expect a steady growth...

Answered: 1 week ago

Question

★★★★★

A furniture corporation manufactures two models of furniturelong dashStandard and Deluxe. The total estimated manufacturing overhead costs are $64,300. The following estimates are available: Standard...

Answered: 1 week ago

Question

★★★★★

need it asap Q1) (Lease-versus-purchase analysis) KKR Live, Inc., a carnival operating firm based in Laramie, Wyoming, is considering the acquisition of a new German-made carousel, with a passenger...

Answered: 1 week ago

Question

★★★★★

1(x) Given the graphs of f(x) and h(x). 6 5 2 1 0 4 3 h(x) 6 5 4 3 2 1 0 0 2 3 x a) Let g(x) = f(x) h(x). What is the value of g'(2)? b) Let p(x) = f(x)/h(x) What is the value of p'(2)? c) Write out...

Answered: 1 week ago

Question

★★★★★

A . ( 1 5 p ) A pharmacy dispensing medicines is staffed by one pharmacist open 1 0 hours a day. On average It takes 1 5 0 seconds to serve a customer, and a customer arrives every 4 minutes....

Answered: 1 week ago

Question

★★★★★

Financial data for Joel de Paris, Incorporated, for last year follow: Joel de Paris, Incorporated Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in...

Answered: 1 week ago

Question

★★★★★

2. (34%) The frame is subjected to a vertical 13 kip force at E and a horizontal 10 kip force a B. Neglect the self-weight of the frame. Find the internal forces (axial, shear, and bending moment) at...

Answered: 1 week ago

Question

★★★★★

Lightning Electronics is a midsize manufacturer of lithium batteries. The company's payroll records for the November 1-14 pay period show that employees earned wages totaling $70,000 but that...

Answered: 1 week ago

Question

★★★★★

White box testing describes what type of pen testing technique to security assessments? Responses A It is a technique where the pen testers have no additional knowledge of the organization or network...

Answered: 1 week ago

Previous Question Next Question