33.The Bangko Sentral ng Pilipinas issued a 60-day T-bills that is currently yielding 3.5%. The following recent premium percentage were identified: Inflation premium = 1.5% Liquidity premium = 2% Default risk premium = 5% Maturity risk premium = 3.5% The "r-star" is (Format: X.XX%)
33.The Bangko Sentral ng Pilipinas issued a 60-day T-bills that is currently yielding 3.5%. The following recent premium percentage were identified: Inflation premium = 1.5% Liquidity premium = 2% Default risk premium = 5% Maturity risk premium = 3.5% The "r-star" is (Format: X.XX%)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Plz answer the question in 20 mints plz it's very urgent plzzzzz
Transcribed Image Text:33.The Bangko Sentral ng Pilipinas issued a 60-day T-bills that is currently
yielding 3.5%. The following recent premium percentage were identified:
Inflation premium = 1.5%
Liquidity premium = 2%
Default risk premium = 5%
Maturity risk premium = 3.5%
The "r-star" is
(Format: X.XX%)
Expert Solution
Step 1
Treasury bills are short term default free investments. These are backed by U.S governments hence, the default risk is zero. The most appropriate benchmark to determine the risk free rate are the Tresury bills.
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