firm plans to issue a 15-year bond. So it needs to estimate the initial bond yield (coupon rate) at this bond issuance with the following information: the 10-year treasury bond yield is 3.8%, the inflation premium (IP) is 2.0%, the liquidity premium (LP) is 0.8%, the default risk premium (DRP) is 1.2%, and the maturity risk premium (MRP) is 0.5%. Group of answer choices 4.5% 5.8% 6.3% 5.1%
firm plans to issue a 15-year bond. So it needs to estimate the initial bond yield (coupon rate) at this bond issuance with the following information: the 10-year treasury bond yield is 3.8%, the inflation premium (IP) is 2.0%, the liquidity premium (LP) is 0.8%, the default risk premium (DRP) is 1.2%, and the maturity risk premium (MRP) is 0.5%. Group of answer choices 4.5% 5.8% 6.3% 5.1%
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
Problem 1PS
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A firm plans to issue a 15-year bond. So it needs to estimate the initial bond yield (coupon rate) at this bond issuance with the following information: the 10-year treasury bond yield is 3.8%, the inflation premium (IP) is 2.0%, the liquidity premium (LP) is 0.8%, the default risk premium (DRP) is 1.2%, and the maturity risk premium (MRP) is 0.5%.
Group of answer choices
4.5%
5.8%
6.3%
5.1%
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