Top Posters
Since Sunday
L
3
d
3
y
3
a
3
n
3
d
3
e
3
d
3
c
3
p
3
M
3
a
3
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
borteleto borteleto
wrote...
Go to Answer
Posts: 2477
Rep: 2 0
6 years ago
You are considering an investment in a AAA-rated U.S. corporate bond but you are not sure what rate of interest it should pay. Assume that the real risk-free rate of interest is 1.0%; inflation is expected to be 1.5%; the maturity risk premium is 2.5%; and, the default risk premium for AAA rated corporate bonds is 3.5%. What rate of interest should the U.S. corporate bond pay?
A) 8.5%
B) 6.0%
C) 5.0%
D) 2.5%
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
Read 65 times
1 Reply
Replies
Answer verified by a subject expert
DeanaRayDeanaRay
wrote...
#1
Top Poster
Posts: 1112
Rep: 14 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

borteleto Author
wrote...

6 years ago
Thanks for your help!!
kh540941
wrote...

Yesterday
this is exactly what I needed
fgarza2146
wrote...

2 hours ago
Helped a lot
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  764 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 345
  
 1147
  
 322
Your Opinion
Which industry do you think artificial intelligence (AI) will impact the most?
Votes: 405
Previous poll results: Should Ph.D.'s be addressed as doctors?