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Problem 7-13 Price and Yield An 8 percent ann...




Problem 7-13 Price and Yield An 8 percent annual coupon bond matures in 5 years. The bond has a face value of $1000 and a current yield of 8.21 percent. What is the bond?s price and yield?,I'm sorry I gave you the wrong question. You can stop working on that one. Please start this one. 1. Keys Corporation's 5-year bonds yield 6.50%, and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5 years bonds is IP = 1.50%, the default risk premium for Keys' bonds is DRP = 0.50% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1)*0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Keys' bonds? (Points: 3) 1.30% 1.40% 1.50% 1.60% 1.70%


Paper#10150 | Written in 18-Jul-2015

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