Question: .A particular security's default risk premium is 6 percent.For all securities, the inflation risk premium is 2 percent and the real interest rate is 3

.A particular security's default risk premium is 6 percent.For all securities, the inflation risk premium is 2 percent and the real interest rate is 3 percent.The security's liquidity risk premium is 2 percent and maturity risk premium is 4 percent.The security has no special covenants.What is the security's equilibrium rate of return?___%

2.Suppose that the current one-year T-bill rate (one-year spot rate) and expected oneyear T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:

1R1 = 12.0%,E(2R1) = 2.5%,E(3R1) = 2.0%,E(4R1) = 14.0%,

Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities ( 1 R 4 )?___%

3.HydroTech Corp stock was $60 per share a year ago when it was purchased.Since then, it paid a $9 per share dividend.The stock price is currently $48.If you owned 1,000 shares of HydroTech, what was your percent return for the past year?%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!