Register

Homework Help Question and Answers

Submit a new Query

Recent Homework Help Question & Answers


Question 38679

posted 1 years ago

Which of the following bonds has the greatest price risk?
a. A 10-year $100 annuity.
b. A 10-year, $1,000 face value, zero coupon bond.
c. A 10-year, $1,000 face value, 10% coupon bond with annual interest payments.
e. A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.
d. All 10-vear bonds have the same price risk since they have the same maturity,

View answer

Question 38673

posted 1 years ago

Renfro Corporation's bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8 % coupon rate paid semiannually the price of the bonds is 1000 usd what is the bonds yield to maturity ,current yield and capital gains yield ?

View answer

Question 38675

posted 1 years ago

Suppose Dillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 face value, a 10% coupon rate, and semiannual interest payments.
a) Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?
Suppose that further that the interest rate remained at 6% for the next 8 years. What would happen to the price of the bonds over time? Explain after the issue date (as in part a) interest rates fell to 6%. Suppose

View answer

Question 38674

posted 1 years ago

The FAMA Company has two bond issues outstanding. Both bonds pay $100 annual interestplus $1000 face value at maturity. Bond L has a maturity of 15 years, and Bond S has a maturityof 1-year.
What will be the value of each of these bonds when the going rate of interest (yield to maturity)is:
A) 8%
B) 12%
Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1-year)?

View answer

Question 38678

posted 1 years ago

A 10-year bond with a 9% annual coupon has a yield to maturity of 8%. Which of the following statements is CORRECT?
a. If the yield to maturity remains constant, the bond's price one year from now will be higher than its current price.
b. The bond is selling below its par value.
c. The bond is selling at a discount.
d. If the yield to maturity remains constant, the bond's price one year from now will be lower than its current price.
e. The bond's current yield is greater than 9%.

View answer

Question 38676

posted 1 years ago

What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky?

View answer

Question 38672

posted 1 years ago

GAMA Corp has issued bonds that have a 10 percent coupon rate payable semi annualy the bonds mature in 8 years have a face value of51000 and a yield to maturity of8.5 percent what is the price of the bonds

View answer

Question 38677

posted 1 years ago

Which of the following statements is CORRECT?
a. If a coupon bond is selling at par, its current yield equals its yield to maturity.
b. If a coupon bond is selling at a discount, its price will continue to decline until it reaches its par value at maturity.
c. If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond.
d. If a bond's yield to maturity exceeds its annual coupon, then the bond will trade at a premium.
e. If a coupon bond is selling at a premium, its current yield equals its yield to maturity.

View answer

Question 38312

posted 1 years ago

a. Use diagrams to show (i) a decline in aggregate supply AS, (ii) the resulting impact on the price level P and (iii) the impact on the exchange rate S.
Consider a small open economy with a fixed exchange rate and limited capital mobility. The country has a large current account deficit. According to the Marshall-Lerner condition, what would be required for a devaluation to be successful? What do empirical studies say about the effects of a devaluation on trade balances?
c. What is the difference between covered and uncovered interest arbitrage? A Canadian investor has to decide whether should invest in Canada or the UK. The interest rate is 2.3% in Canada and 3.4% in the UK. The exchange rate XCAD/1GBPis 1.33. Use the equation for the covered interest rate parity and calculate the forward rate. If uncovered interest parity did hold, what would be the expected future exchange rate? What would this imply for the expected change in the CAD/GBP exchange rate?
The balance of payments summarises the economic transactions of the UK with the rest of the world. These transactions can be broken down into 3 main accounts: the current account, the capital account and the financial account. Briefly explain each main component.
Using in small open economies.a diagram, explain how fiscal policy can be used to manage the exchange rate

View answer

Question 38313

posted 1 years ago

a. Consider the Mundel-Fleming (M-L) model with a fixed exchange rate. The exchange rate S is defined as x units of domestic currency for 1 unit of foreign currency, hence,a rise in S implies a depreciation of the domestic currency.
In the diagram below, insert labels for the vertical axis, the horizontal axis, the downward sloping line and the upward sloping line. Add the line that indicates the balance of payments (BP), assuming that cross-border capital mobility is limited,and the BP is in surplus (BP>0). How would the BP line change if capital mobility increased?
b. The balance of payments is defined as: CA (current account) + K (net capital flows,excluding changes in the central bank's foreign exchange reserves). The exchange rate is fixed and the BP (as defined) is in surplus. How does this affect the central bank's foreign exchange reserves and the money supply?
c. What could the central bank do to avoid a change in the money supply? Describe the central bank's actions.
d. Consider the main assumptions and policy conclusions of the Monetary Approach to the balance of payments and the Mundell-Fleming model. Which has become obsolete? Which is still relevant today?

View answer

Questions not Found

Most popular subject

Thermodynamics

Essay/Summary

Mechanics

Complex Analysis

Engineering Economics

Calculus

Modern Physics

General Chemistry

Strength Of Materials

Fluid Mechanics

x