The Following Premiums Apply to a 8-Month Bond: Interest Rate

question 1

Multiple Choice

The following premiums apply to a 8-month bond: interest rate risk premium = 0.32 percent; liquidity premium = 0.44 percent; default premium = 1.23 percent; inflation premium = 3.12 percent; real rate = 3.20 percent.What is the expected nominal interest rate on a 8-month risky security given these values?

• A)5.85 percent
• B)6.45 percent
• C)7.55 percent
• D)8.31 percent
• E)9.30 percent

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Definitions:

Circular Runout

A form of measurement that checks the roundness and concentricity of a cylindrical object's surface as it rotates.

Circularity

The condition where all points on a circle’s circumference are equidistant from the center, measuring roundness.

Datum Axis

Datum Axis refers to an imaginary line, plane, or point referenced in manufacturing and design to measure the geometry of parts and assemblies for precise construction.

Total Runout

The comprehensive deviation of a surface from its true rotational path, measured along and around the surface.