Calculate the equity premium on the following set of data: Stock market return: 12.5% Corporate bond return: 8.2% Short-term T- bills: 4.8% Inflation: 3.1% a. 7.7% b. 9.4% c. 8.2% d. 7.1%
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- Assume the following Risk Premiums: DRP ? LP = 0.25% MRP =1.15% 10-year Government bonds yield 4.65% 10-year corporate bonds yield 6.75%. What is the default risk premium on corporate bonds?In a year in which corporate bonds offered an average return of 9%, treasury bonds offered an average return of 7%, common stocks offered an average return of 16% and Treasury bills offered 3%. The market risk premium was: ______%.Calculate the annual interest (in $) and current yield (as a %) of the bond. (Round your percentage to one decimal place.) Company Coupon Rate Annual Interest Market Price Current Yield Company 5 7.25% $ 101.00 7.18%
- The maturity risk premium for Vonda bonds are 3%, default risk premium for Vonda bonds are 4%, and the liquidity risk premium for Vonda bonds are 2%. The real rate of return is 3% and the inflation premium is 3%. What is the nominal rate of return?In a bond portfolio, the following are the present values of all cash flows by annual period: Year PV Cash flows (millions) 1 14.3 2 13.2 3 15.3 4 10.5 5 18.4 What is the percentage contribution to duration of the year 3 cash flows? Enter answer in percents.What equation was used to get the Aftertax Cost of Debt? Debt Face Value 1000 Bond Price 1271.59 Coupon Payment 75 Maturity 50 Yield to Maturity 11.64% Aftertax Cost of Debt 9.31%
- Using the following information, determine the default risk premium on the 10 year AA corporate bond: Rate % inflation 1.96 T-bill 5.00 10y T-Bond 6.00 10y AAA Corporate 6.46 10y AA Corporate 7.76Use the following table: Series Average return Large stocks 11.76 % Small stocks 16.46 Long-term corporate bonds 6.23 Long-term government bonds 6.10 U.S. Treasury bills 3.83 Inflation 3.10 a. Determine the return on a portfolio that was equally invested in large-company stocks and long-term corporate bonds. b. What was the return on a portfolio that was equally invested in small stocks and Treasury bills?The return an investor earns on a bond over a period of time is known as the holding period return, defined as interest income plus or minus the change in the bond's price, all divided by the beginning bond price. a. What is the holding period return on a bond with a par value of $1,000 and a coupon rate of 7.5 percent if its price at the beginning of the year was $1,070 and its price at the end was $960? Assume interest is paid annually. Note: Negative value should be indicated by parenthesis. Round your answer to 2 decimal places. Holding period return %
- Fill in the table below following .Bond Coupon Rate Maturity YTM=6% YTM=7% %Change YTM=5% %ChangeW 4% 10X 8% 10Y 4% 30Z 8% 30Using the following information, determine the default risk premium on the 10 year AAA corporate bond: Rate % inflation 1.20 T-bill 5.00 10y T-Bond 6.00 10y AAA Corporate 6.46 10y AA Corporate 8.17Calculate the annual interest (in $) and current yield (as a %) of the bond. (Round your percentage to one decimal place.) Company Coupon Rate Company 5 8.25% Annual Interest Enter a number. x Market Price 107.00 7.7 Current Yield %
