A particular security's default risk premium is 4.20 percent. For allsecurities, the inflation risk premium is 2.95 percent and the real interestrate is 3.35 percent. The security's liquidity risk premium is 1.05 percentand maturity risk premium is 1.45 percent. The security has no specialcovenants. What is the security's equilibrium rate of return?O 13.00%O 8.80%O 2.60%O 11.95%

The equilibrium rate of return (EROR) is calculated by the following formula.…

Answered: A particular security's default risk…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

See similar textbooks

Similar questions

You may remember seeing home mortgage interest rates fluctuate widely in a period of not too many years. Refer to the following tables, which compare the amortization of a $120,000, 30-year mortgage for rates of 4.0% and 12.5%. Give the monthly payments for each of the following for (a) a 4.0% rate, and (b) a 12.5% rate.
- You have just sold your house for $900,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $700,000. The mortgage is currently exactly 18% years old, and you have just made a payment. If the interest rate on the mortgage is 6.25% (APR), how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less than six decimal places.) Cash that remains after payoff of mortgage is $ (Round to the nearest dollar.)
4. Calculating Annuity Present Value. An investment offers $7,000 per year for 15 years, with the first payment occurring 1 year from now. If the required return is 9 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?
If P100,000 is invested for 6 months at 1.5% per annum, what is the maturity value? O P100,750 O P100,739.73 P739.73 O P750
m1
The general fund budget for a state for 1988 (Period 1) to 2011 (Period 24) follows. Year Period Budget($billions) 1988 1 3.06 1989 2 3.29 1990 3 3.57 1991 4 4.32 1992 5 4.39 1993 6 4.57 1994 7 4.69 1995 8 5.18 1996 9 5.39 1997 10 5.66 1998 11 6.01 1999 12 6.2 2000 13 6.48 2001 14 6.65 2002 15 6.56 2003 16 6.78 2004 17 6.98 2005 18 7.65 2006 19 8.38 2007 20 8.57 2008 21 8.66 2009 22 8.43 2010 23 8.23 2011 24 8.76 b. Develop a linear trend equation for this time series. Round your answers to 4 decimals. T t = + t c. What is the forecast for 2012? Round your answer to two decimal places.$ billion
Exercise 1: Compute the Simple Interest and the Maturity Value. Principal Maturity Value (F) Interest Rate Time Interest per Year 8% 12.7% 1 50,000 1,000,000 64,400 750,000 5 2 years 18 months 7 months 6 months 31/2 years 2 years 10 months 5 months 3 5 1/2% 4 10 3/4 % 800,000 540,000 337,500 1,250,000 15% 6. 11.9% 7 8.4% 8. 122% Note: the interest rate given is per year, so if the term is in months, convert it to year ( 1 year = 12 months) Example: 3 months x 1 year = 0.25 year 12months
6, Calculate the future values for Dawn and Dave's investments. a. Dawn invests $2000 each year of 10 consecutive years, starting at age 25. Assume an 8% annual rate of return with annual compounding. After age 35 she no longer adds to the account, but the money continues to compound. What was Dawn's out-of-pocket amount? How much will Dawn have accumulated by age 65? b. Dave invests $2000 each year for 30 consecutive years, starting at age 35. Assume the same 8% annual rate of return with annual compounding. What was Dave's out-of-pocket amount? How much will Dave have accumulated by age 65? c. Who contributed the most out-of-pocket? Who made the most money?

Recommended textbooks for you

Advanced Engineering Mathematics

Advanced Math

ISBN:

9780470458365

Author:

Erwin Kreyszig

Publisher:

Wiley, John & Sons, Incorporated

Numerical Methods for Engineers

Advanced Math

ISBN:

9780073397924

Author:

Steven C. Chapra Dr., Raymond P. Canale

Publisher:

McGraw-Hill Education

Introductory Mathematics for Engineering Applicat…

Advanced Math

ISBN:

9781118141809

Author:

Nathan Klingbeil

Publisher:

WILEY

Advanced Engineering Mathematics

Advanced Math

ISBN:

9780470458365

Author:

Erwin Kreyszig

Publisher:

Wiley, John & Sons, Incorporated

Numerical Methods for Engineers

Advanced Math

ISBN:

9780073397924

Author:

Steven C. Chapra Dr., Raymond P. Canale

Publisher:

McGraw-Hill Education

Introductory Mathematics for Engineering Applicat…

Advanced Math

ISBN:

9781118141809

Author:

Nathan Klingbeil

Publisher:

WILEY

Mathematics For Machine Technology

Advanced Math

ISBN:

9781337798310

Author:

Peterson, John.

Publisher:

Cengage Learning,

Basic Technical Mathematics

Advanced Math

ISBN:

9780134437705

Author:

Washington

Publisher:

PEARSON

Topology

Advanced Math

ISBN:

9780134689517

Author:

Munkres, James R.

Publisher:

Pearson,

SEE MORE TEXTBOOKS