Distinguish between the concepts of the inflation premium and the default-risk premium
What will be an ideal response?
Inflation premium is a premium to compensate for anticipated inflation that is equal to the price change expected to
occur over the life of the bond or investment instrument.
Default-risk premium is the additional return required by investors to compensate them for the risk of default. It is
calculated as the difference between a U.S. Treasury bond and a corporate bond of the same maturity and
marketability.
You might also like to view...
An important key to success in permission marketing programs is to make sure participants have actually agreed to participate and not been tricked into participating or signed up without their knowledge
Indicate whether the statement is true or false
The possible arrangements of the responsibilities for handling exports include all of the following except:
A) as a part-time activity performed by domestic employees. B) through an export partner affiliated with the domestic marketing structure. C) through an export department within an international division. D) through an export department that is independent of the domestic marketing structure. E) through an export department of an embassy in a foreign country.