Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.70%, the company's credit risk premium is 4.20%, the domestic beta is estimated at 0.93, the international beta is estimated at 0.64, and the company's capital structure is now 80% debt. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.60% and the company's effective tax rate is 42%. Calculate the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates. both a. 8.30% b. 7.30% c. 5.50% d. 4.40%

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.