Pollos cost of comon equity ,Re,is ??? General accounting Pollo Inc.'s 8.25% bonds have a YTM of 10.00%.The estimated risk premium between thecompany's bonds and stocks is 3%. Pollo's costof common equity, Re, is%.

To calculate Pollo Inc.'s cost of common equity (Re), we use the bond yield plus risk premium…

Answered: Pollo Inc.'s 8.25% bonds have a YTM of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Pollo Inc.'s 5.34% bonds have a YTM of 8.33%. The estimated risk premium between the company's bonds and stocks is 6%. Pollo's cost of common equity, Re, is ____%. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process.
Inc.'s 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.6%. The real risk-freerate is 2.75%, the default risk premium for Crockett's bonds is DRP = 1.35% versus zero for T-bonds, theliquidity premium on Crockett's bonds is LP = 0.90% versus zero for T-bonds, and the maturity riskpremium for all bonds is found with the formula MRP = (t – 1) × 0.1%, where t = number of years tomaturity. What inflation premium (IP) is built into 5-year bond yields?
Kern Corporation's 5-year bonds yield 7.50% and 5-year T-bonds yield 4.30%. The real risk-free rate is r* = 2.5%, the default risk premium for Kern's bonds is DRP = 1.90% versus zero for T-bonds, the liquidity premium on Kern's bonds is LP = 1.3%, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1) × 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on all 5-year bonds?
Koy Corporation's 5-year bonds yield 8.15%, and 5-year T-bonds yield 4.90%. The real risk-free rate is r* = 3.10%, the inflation premium for 5-year bonds is IP=1.40%, the liquidity premium for Koy's bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP=(t-1) x 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Koy's bonds? Not Answered 4.00% b O Ob. 3.25% 3 O Oc2.10% O d. 2.85% O e 2.50%
Koy Corporation's 5-year bonds yield 7%, and 5-Year T-bonds yield 5.15%. The real risk-free rate is r*=3%, the inflation premium for 5=year bonds is IP=1.75%, the liquidity premium for Koy s bonds is LP=.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP=(t-1)*.1%, where t=number of years to maturity. What is the default risk premium (DRP) on Koy's bonds? B. 6.6 is the answer. Pls this ans should match.
Kern Corporation's 5-year bonds yield 8.10% and 5-year T-bonds yield 4.90%. The real risk-free rate is r* = 2.40%, the default risk premium for Kern's bonds is DRP = 1.90% versus zero for T-bonds, the liquidity premium on Kern's bonds is LP = 1.30%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) × 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on all 5-year bonds? a. 2.60% b. 0.60% c. 2.05% d. 1.90% e. 2.10% Please answer fast I give you upvote
Kop Corporation's 5-year bonds yield 6.50%, and T-bonds with the same maturity yield 4.40%. The default risk premium for Kop's bonds is DRP = 0.40%, the liquidity premium on Kop's bonds is LP 1.70% versus zero on T-bonds, the inflation premium (IP) is 1.50%, and the maturity risk premium (MRP) on 5-year bonds is o.40%. What is the real risk-free rate, r*? I=
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Mansell Corporation's 5-year bonds yield 6.80% and 5-year T-bonds yield 5.80%. The real risk-free rate is r* = 1.80%, the inflation premium for 5-year bonds is IP = 3.50%, the liquidity premium for Mansell’s bonds is LP = 0.60% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t) × 0.10%, where t = number of years to maturity. What is the default risk premium (DRP) on Mansell’s bonds? a. 0.30% b. 0.40% c. 0.50% d. 0.60% e. 0.70%
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Squire Inc.'s 5-year bonds yield 12.25%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Squire's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t − 1) × 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Squire's bonds?
Squire Inc.'s 5-year bonds yield 12.25%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Squire's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t − 1) × 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Squire's bonds? Select the correct answer. a. 6.57% b. 6.25% c. 6.41% d. 6.73% e. 6.09%

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Pollo Inc.'s 8.25% bonds have a YTM of 10.00%. The estimated risk premium between the company's bonds and stocks is 3%. Pollo's cost of common equity, Re, is %.