Expert Ace
This page lists questions and answers that were posted by visitors named Expert Ace.
Questions
The following questions were asked by visitors named Expert Ace.
Answers
The following answers were posted by visitors named Expert Ace.
nominal risk free rate for 10 years = 3.7 + 1.5 = 5.2 nominal risk free rate for 30 years = 4.0 + 1.5 = 5.5 Thus maturity risk premium is 5.5 - 5.2 = 0.3% It is basically premium for holding bond for longer duration.
12 years ago
r = RR + IP + DRP + MRP + LP or RR + IP + DRP + MRP + LP = r 30 year bond 10 year bond r = 4.0% r = 3.7% IP = 1.5% IP = 1.5% 4.0 + 1.5 = 5.5% 3.7 + 1.5 = 5.2% = 0.3% 30 year = (1 + 0.04)*(1 + 0.015) - 1 1.04 * 1.015 = 1.0556 1.0556 - 1 = 0.0556 or 5.56% =...
12 years ago