What is meant by a default risk premium (DRP)?
Answer to relevant QuestionsAs an economist for a major bank you are asked to explain the present substantial increase in the price level, notwithstanding the fact that neither the money supply nor the velocity of money has increased. How can this ...A ten-year U.S. Treasury bond has a 3.50 percent interest rate, while a same maturity corporate bond has a 5.25 percent interest rate. Real interest rates and inflation rate expectations would be the same for the two bonds. ...Assume that the interest rate on a one-year Treasury bill is 6 percent and the rate on a two-year Treasury note is 7 percent. a. If the expected real rate of interest is 3 percent, determine the inflation premium on the ...Briefly describe how inflation or purchasing power impacts on stated or nominal interest rates. Go to the Federal Reserve Web site, http://www.federalreserve.gov. Click on the Consumer Information tab, and research consumer credit in the various hyperlinks. Find average interest rates charged by commercial banks on ...
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