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SushiMagic
07.04.2020 •
Business
A 5-year Treasury bond has a 5.2% yield. A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10 years (IP10=2.5%). Assume that there is no maturity risk premium (MRP=0) ans that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium ans the liquidity premium are zero for Treasury securities: DRP=LP=0.) A 5-year corporate bond has the same defult risk premium ans liquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond?
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Ответ:
The friends that reach the goal of saving $720 are Friend A who saved $722.8 and Friend C who saved $756
Explanation:
We need to calculate how much money will they earn according to the time they work and the price of the hour, taking into account that they work for 8 weeks, ando those who have saved more than $720 would have reach their goal.
So for calculating we just need to multiply all the values, first we are going to calculate the total hours and later the total earnings by multiplying it by the price of the hour for each friend:
Friend A worked = 13 hours x 8 weeks = 104 hours
Friend A earned = 104 hours x $6.95 = $722.8
As he gained more than $720 friend A reached the goal.
Friend B worked = 15 hours x 8 weeks = 120 hours
Friend B earned = 120 hours x $5.85 = $702
As he didn't gained more than $720 friend B didn't reached the goal.
Friend C worked = 18 hours x 8 weeks = 144 hours
Friend C earned = 144 hours x $5.25 = $756
As he gained more than $720 friend C reached the goal.
Friend D A worked = 11 hours x 8 weeks = 88 hours
Friend D earned = 88 hours x $7.8 = $686.4
As he didn't gained more than $720 friend D didn't reached the goal.