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Author Question: The inflation risk premium on a bond is 2 percent, the U.S. T-bill rate is 5 percent, the maturity ... (Read 65 times)

justinmsk

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on: Jul 11, 2018
The inflation risk premium on a bond is 2 percent, the U.S. T-bill rate is 5 percent, the maturity risk premium on the bond is 3 percent, the default risk premium on the bond is 2 percent, and the liquidity risk premium on the bond is 1 percent.
 
  Calculate its nominal rate of return.
  A) 16
  B) 13
  C) 11
  D) 9

Question 2

Both current and prospective shareholders are interested in the firm's current and future level of risk and return, which directly affect share price.
 
  Indicate whether the statement is true or false


juliaf

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Reply #1 on: Jul 11, 2018
Answer to Question 1

B

Answer to Question 2

TRUE


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