The difference between the required return from corporate debt and from government securities is called _______________. Flag
Question:
The difference between the required return from corporate debt and from government securities is called _______________.
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Question 35
2.5pts
A government treasury bond with 5-year tenor carries a 6.5% coupon. Normally, government treasury bonds carry a 1.5% maturity risk premium. Assuming an inflation rate of 2.5% is expected over the tenor of the t-bond, how much is the real risk-free rate.
Answer should be with 2 decimal points without the percentage sign (e.g., 3.00).
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Question 36
2.5pts
A government treasury bond with 5-year tenor carries a 4.5% coupon. Normally, government treasury bonds carry a 1.5% maturity risk premium. Assuming an inflation premium of 0.65%, how much is the real risk-free rate.
Answer should be with 2 decimal points without the percentage sign (e.g., 3.00).
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Question 37
2.5pts
What is the name of the rule which is represented by the following formula:
Nominal Interest Rate = Real Interest Rate + Inflation Premium
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Question 38
2.5pts
The following information are provided to you:
- Current government securities carry a real interest rate at 3.75%
- Inflation premium for long-term securities is estimated at 1.25%
- The market risk premium for equity instruments today is estimated at 2.50%
- Alphabet Inc.'s beta is estimated to be at 1.25
- Apple Co.'s beta is estimated to be at 1.10
How much is the required rate of return for Alphabet Inc.?
Answer should be with 2 decimal points without the percentage sign (e.g., 3.00). Don't forget to indicate whether your answer is positive or negative.
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher