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Vaughn Corporation is considering the issue of commercial paper and would like to know the yield it should offer on its commercial paper The corporation believes that a 02 percent default risk

Vaughn Corporation is considering the issue of commercial paper and would like to know the yield it should offer on its commercial paper. The corporation believes that a 0.2 percent default risk premium, a 0.1 percent liquidity premium, and a 0.3 percent tax adjustment are necessary to sell its commercial paper to investors. Furthermore, annualized T-bill rates are 7 percent. Based on this information, Vaughn should offer ____ percent on its commercial paper.

Question 2

 

1)

8.0

 

2)

7.6

 

3)

7.5

 

4)

7.9

Question 3

When Japanese interest rates rise, and if exchange rate expectations remain unchanged, the most likely effect is that the supply of loanable funds provided by Japanese investors to the United States will ____, and the U.S. interest rates will ____.

Question 17 options:

 

1)

increase; increase
 

2)

increase; decrease
 

3)

decrease; decrease
 

4)

decrease; increase
 
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Apr 28 2020 View more View Less

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