100% Original, Plagiarism Free, Tailored to your instructions

Order Now!

O… Show more On the first day of your summer internship, y

O… Show more On the first day of your summer internship, you’ve been assigned to work with the Chief Financial Officer (CFO) of SanBlas Jewels Inc. Not knowing how well trained you are, the CFO has decided to test your understanding of interest rates. Specifically, she asked you to provide a reasonable estimate of the nominal interest rate for a new issue of Aaa-rated bonds to be offered by SanBlas Jewels Inc. The final format that the chief financial officer of SanBlas Jewels has requested is that of equation (2-1) in the text. Your assignment also requires that you consult the data in Table 2-2. Some agreed-upon procedures related to generating estimates for key variables in equation (2-1) follow. a. The current 3-month Treasury bill rate is 2.96 percent, the 30-year Treasury bond rate is 5.43 percent, the 30-year Aaa-rated corporate bond rate is 6.71 percent, and the inflation rate is 2.33 percent. b. The real risk-free rate of interest is the difference between the calculated average yield on 3-month Treasury bills and the inflation rate. c. The default-risk premium is estimated by the difference between the average yield on Aaarated bonds and 30-year Treasury bonds. d. The maturity premium is estimated by the difference between the average yield on 30-year Treasury bonds and 3-month Treasury bills. e. SanBlas Jewels’ bonds will be traded on the New York Bond Exchange, so the liquidity premium will be slight. It will be greater than zero, however, because the secondary market for the firm’s bonds is more uncertain than that of some other jewel sellers. It is estimated at 4 basis points. A basis point is one one-hundredth of 1 percent. Now place your output into the format of equation (2-1) so that the nominal interest rate can be estimated and the size of each variable can also be inspected for reasonableness and discussion with the CFO. Table 2.2 Interest Rates Levels and Inflation Rates, 1984 through 2008 Table 2.2 Interest Rates Levels and Inflation Rates, 1984 through 2008 Table 2.2 Interest Rates Levels and Inflation Rates, 1984 through 2008 Table 2.2 Interest Rates Levels and Inflation Rates, 1984 through 2008 Table 2.2 Interest Rates Levels and Inflation Rates, 1984 through 2008 Year 3-month Treasury Bills % 30-yr Treasury Bonds % 30-yr Aaa-rates Corporate Bonds % Inflation Rate 1984 9.54 12.41 12.71 3.9 1985 7.47 10.79 11.37 3.8 1986 5.97 7.78 9.02 1.1 1987 5.78 8.59 9.38 4.4 1988 6.67 8.96 9.71 4.4 1989 8.11 8.45 9.26 4.6 1990 7.5 8.61 9.32 6.1 1991 5.38 8.14 8.77 3.1 1992 3.43 7.67 8.14 2.9 1993 3 6.59 7.22 2.7 1994 4.25 7.37 7.97 2.7 1995 5.49 6.88 7.59 2.5 1996 5.01 6.71 7.37 3.3 1997 5.06 6.61 7.27 1.7 1998 4.78 5.58 6.53 1.6 1999 4.64 5.87 7.05 2.7 2000 5.82 5.94 7.62 3.4 2001 3.4 5.49 7.08 1.6 2002 1.61 5.43 6.49 2.4 2003 1.01 4.93 5.66 1.9 2004 1.37 4.86 5.63 3.3 2005 3.15 4.51 5.23 3.4 2006 4.73 4.91 5.59 2.5 2007 4.36 4.84 5.56 4.1 2008 1.37 4.28 5.63 0.1 Mean 4.76 6.89 7.73 2.97 Chapter 2 • The Financial Markets and Interest Rates 45 ISBN 1-256-47903-9 Foundations of • Show less

Our Service Charter

  1. Excellent Quality / 100% Plagiarism-Free

    We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
  2. Free Revisions

    We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
  3. Confidentiality / 100% No Disclosure

    We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
  4. Money Back Guarantee

    If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
  5. 24/7 Customer Support

    We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

Instant Quote

Single spaced
approx 275 words per page
Urgency (Less urgent, less costly):
Total Cost: NaN

Get 10% Off on your 1st order!