1. In the beginning of 2017, a bonds yield to maturity is 7.40%. It includes a 1.90% inflation risk premium. In 2017, actual inflation in the economy was 2.10%. What is the bond's real rate of return in 2017? Ignore other risk factors. You expect to hold the bond until maturity.
7.40% 5.30% 7.60% 5.50%
Equipment is purchased for $1,000,000 (no salvage value) in cash. The company uses straight line depreciation for 7 years. Assume no other fixed assets. What is the Accumulated Depreciation balance at the end of year 3?
$571,429
$142,857
$428,571
$0
3. What risk term is used to describe the relationship between market yields and bond prices? Interest rate risk Default risk Unsystematic risk Inflation risk
Interest rate risk
Default risk
Unsystematic risk
Inflation risk