?You are given the following data:
??
r* = real risk-free rate
4%
Constant inflation premium (IP)
7%
Maturity risk premium (MRP)
1%
Default risk premium for AAA bonds (DRP)
3%
Liquidity premium for long-term T-bonds (LP)
2%
?
?Assume that a highly liquid market does not exist for long-term T-bonds, and the expected rate of inflation is a constant. Given these conditions, the rate on long-term Treasury bonds is _____.
A. ?23%
B. ?11%
C. ?14%
D. ?19%
E. ?27%
Answer: C
You might also like to view...
One reason cultural factors challenge global marketers is that many of these factors are hidden from view
Indicate whether the statement is true or false
A situation in which all markets are in equilibrium and all economic agents have made decisions in their own best interest is called
A. general equilibrium. B. the liquidity effect. C. the real wealth effect. D. dynamic equilibrium.
Utah Co sold merchandise to Big Sky Corp on December 1, 2016, for $9,000, and accepted a promissory note for payment in the same amount. The note has a term of 90 days and a stated interest rate of 8%. Utah's accounting period ends on December 31 . What amount should Utah recognize as interest revenue on December 31, 2016 (if a 360 day year is assumed)?
a. $ -0- b. $ 60 c. $120 d. $180
Susie has been tasked with examining attitudes and expectations of employees. She can accomplish this by conducting a cultural audit.
Answer the following statement true (T) or false (F)