Yield: Yield is the return to be earned from an investment, if hold it for a specific period. Yield includes payment of interest or dividend but does not include capital appreciation. Calculate the yield as follows: Yield = ( Nominal risk free rate + Liquidity premium + Maturity risk premium + Default risk premium ) Given one year Treasury bond rate is 2.4%, one year bond yield is equal to 4.8%, Liquidity premium is equal to 0.3 and maturity risk premium is 0.15.

Question

Want to see the full answer?

Answer 1

Question

Chapter 5, Problem 20PROB

Summary Introduction

Yield:

Yield is the return to be earned from an investment, if hold it for a specific period.

Yield includes payment of interest or dividend but does not include capital appreciation.

Calculate the yield as follows:

Yield=(Nominal risk free rate+Liquidity premium+Maturity risk premium+Default risk premium)

Given one year Treasury bond rate is 2.4%, one year bond yield is equal to 4.8%, Liquidity premium is equal to 0.3 and maturity risk premium is 0.15.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

4. On August 20, Mr. and Mrs. Cleaver decided to buy a property from Mr. and Mrs. Ward for $105,000. On August 30, Mr. and Mrs. Cleaver obtained a loan commitment from OKAY National Bank for an $84,000 conventional loan at 5 percent for 30 years. The lender informs Mr. and Mrs. Cleaver that a $2,100 loan origination fee will be required to obtain the loan. The loan closing is to take place September 22. In addition, escrow accounts will be required for all prorated property taxes and hazard insurance; however, no mortgage insurance is necessary. The buyer will also pay a full year's premium for hazard insurance to Rock of Gibraltar Insurance Company. A breakdown of expected settlement costs, provided by OKAY National Bank when Mr. and Mrs. Cleaver inspect the uniform settlement statement as required under RESPA on September 21, is as follows: I. Transactions between buyer-borrower and third parties: a. Recording fees--mortgage b. Real estate transfer tax c. Recording fees/document…

Hello tutor give correct answer

Need assistance urgently by the expert. Fake answers will be rate as unhelpful.