This paper circulates around the core theme of The Habender Company just issued a two-year bond at 12%. together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
The Habender Company just issued a two-year bond at 12%. Inflation is expected to be 4% next year and 6% the year after. Habender estimates its default risk premium at about 1.5% and its maturity risk premium at about 0.5%. Because it’s a relatively small and unknown firm, its liquidity risk premium is about 1.8% even on relatively short debt like this. What pure interest rate is implied by these assumptions? Round your answer to one decimal place.
