The Dunley Corp. plans to issue 5-year bonds. It believes the bonds will have a BBB rating. Suppose AAA bonds with the same maturity have a 4% yield. If the market risk premium is 5% using the data in the tables:

a. Estimate the yield Dunley will have to pay, assuming an expected 60% loss rate in the event of default during average economic times. What spread over AAA bonds will it have topay?

b. Estimate the yield Dunley would have to pay if it were a recession, assuming the expected loss rate is 80% at that time but the beta of debt and market risk premium are the same as in average economic times. What is Dunley's spread over AAAnow?

c. In fact, one might expect risk premia and betas to increase in recessions. Redo part (b) assuming that the market risk premium and the beta of debt both increase by 20%, that is they equal 1.2 times their value in recessions.

Ann and jack have been partners for several years. their​ firm, a​ & j tax​ preparation, has been very​ successful, as the pair agree on most​ business-related questions. one​ disagreement, however, concerns the legal form of their business. for the past two​ years, ann has tried to convince jack to incorporate. she believes that there is no downside to incorporating and sees only benefits. jack strongly​ disagrees; he thinks that the business should remain a partnership forever. ​ first, take​ ann's side, and explain the positive side to incorporating the business. ​ next, take​ jack's side, and state the advantages to remaining a partnership. ​ lastly, what information would you want if you were asked to make the decision for ann and​ jack? which of the following statements are the advantages of a partnership compared to a​ corporation? ​(choose all that​ apply.) a. less expensive to organize. b. ownership is readily transferable. c. lower income taxes. d. owners have limited liability. e. long life of firm.