The Gergen Group's 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* = 2.80%, the default risk premium for Gergen's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Gergen's bonds is LP = 1.25%, and the maturity risk premium for all bonds is found with the formula MRP = (t ? 1) × 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on 5-year bonds?
A. 1.40%
B. 1.55%
C. 1.71%
D. 1.88%
E. 2.06%
Answer: B
You might also like to view...
Which of the following is TRUE of the comparison between a manual and a computerized accounting information system?
A) In both manual and computerized systems, reports and financial statements must be created using Word documents, Excel spreadsheets, or PowerPoint. B) In a computerized system, the software can generate financial reports instantaneously that cannot be formatted. C) In a manual system, data are contained in paper documents, which are often stored in filing cabinets and off-site document warehouses; whereas in a computerized system, data are stored on a main computer called a server. D) In both manual and computerized systems, processing data includes manually journalizing transactions and posting to the accounts.
Discounted cash flow methods typically ________.
A) use simple interest calculations B) assume that cash flows will be reinvested when received C) focus on the payback period D) comply with the requirements of GAAP
A stock dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock to its stockholders without any payment in return.
Answer the following statement true (T) or false (F)
That overall job satisfaction is a critical link to employee performance, including their customer service performance, is sometimes referred to as?
a. The joyful-producer hypothesis b. The happy-efficient worker hypothesis c. The happy-productive worker hypothesis d. The productive worker hypothesis