Answer the four questions below: At the present time, 10 year Treasury bonds are yielding 5.0%, where as investment grade corporate bonds (BBB rated-10 year) are paying 7%, please answer the following:
1. Why is there a differences in the rates? Please advise in financial terms and concepts.
2.⢠If the 10-year Treasury bond rate is 3.0%, the inflation premium is 1.0% and maturity risk premium on 10-year bond is .3%: What is the risk-free rate on the treasury bonds?
3. A company wishes to raise additional capital, yet, it doesn't want to dilute its stockholders' equity. How can a company expand its corporate presence, being cognizant of not increasing its debt to equity ratio considerably?
4. What are some of the factors that can affect a bond price? Please advise in detail.
Answer the four questions below: At the present time, 10 year Treasury bonds are yielding 5.0%, where as investment grade corporate bonds (BBB rated-10 year) are paying 7%, please answer the following:
1. Why is there a differences in the rates? Please advise in financial terms and concepts.
2.⢠If the 10-year Treasury bond rate is 3.0%, the inflation premium is 1.0% and maturity risk premium on 10-year bond is .3%: What is the risk-free rate on the treasury bonds?
3. A company wishes to raise additional capital, yet, it doesn't want to dilute its stockholders' equity. How can a company expand its corporate presence, being cognizant of not increasing its debt to equity ratio considerably?
4. What are some of the factors that can affect a bond price? Please advise in detail.
