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Yeild to maturity
Essay specific features
Written by:
Michael T
Date added:
August 7, 2015
Level:
University
Grade:
A
No of pages / words:
3 / 623
Was viewed:
9882 times
Rating of current essay:
Essay content:
Inflation premium is required by investors to compensate the inflation adjustments.
Combining both real rate of return and inflation premium determines the risk-free rate of return. This is the rate that compensates the investor for the current use of his or her funds and for the loss in purchasing power due to inflation but not for taking risks...
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A risk premium consists of financial risk and business risk to the investor. Business risk relates to the inability of the firm to hold its competitive position and maintain stability and growth in its earnings. Financial risk relates to the inability of the firm to meet its debt obligations as they come due (Block & Hirt, 2005)...
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