Ahmad as a financial advisor has given you the following advice. "Long term bonds are the greatest investment because their interest rate is over 20%". Is Ahmad, necçessarily right? Justify your answer. Note:

Q: Answer the question based on the following information for a bond having no expiration date: bond…

A: The interest rate is the percentage of the principal amount that a person must pay in annual…

Q: Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount…

A: * SOLUTION :-    From the given information the calculation is provided below as

Q: Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount…

A: In economics, bonds are fixed income instruments which represents the loans made by investors to…

Q: What happens to interest rates in the market when bond prices fluctuate a lot

A: Bond price:- Bond price can be explained as discounted present value of a bond's anticipated cash…

Q: Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume these…

A: The number of years (n) required to double the investment can be calculated by using the following…

Q: Answer the question based on the following information for a bond having no expiration date: bond…

A: An unique kind of bond that doesn't have a maturity date is a perpetual bond. Theoretically,…

Q: Answer the question based on the following information for a bond having no expiration date: bond…

A: If income is $18 and price of X is $4 and price of Y is $2. Units of X MUx MUx/Dollar…

Q: The interest rate for a bond is always equal to its yield to maturity

A: The interest rate can be defined as the amount of interest which is measured as a percentage of the…

Q: Answer the next question on the basis of the following information for a bond having no expiration…

A: The equilibrium price and quantity of bonds traded in the market are determined by the bonds market…

Q: Refer to the table below to answer one question. Interest Rate Option March 2020 Cash 0.00% Checking…

A: The instrument that is being used by individuals to carry out day-to-day transactions which are…

Q: Suppose that Intel is considering building a new chip-making factory a. Assuming that Intel needs to…

A: Purchase of an asset in the present period with the hope that it will generate income in the…

Q: You will be LESS likely to buy bonds if: Stock prices become more volatile. You expect interest…

A: Individual investors seeking pay or the conservation of capital regularly consider adding bonds to…

Q: If you hold a bond at a time when the market interest rate is increasing, you will find that the…

A: Interest Rate Risk: The phenomenon of an inverse relationship between market interest rates and bond…

Q: Give two specific examples of "wealth," which may lead to the increase in the demand for bonds,…

A: Answer -

Q: You own a zero-coupon bond that will pay 10,000 in two years. The interest rate from 2021 to 2022 is…

A:

Q: If the supply of financial capital increases   Interest rates will remain unchanged.   Interest…

A: Interest rate is determined by the demand and supply of financial capital.

Q: In January of 2019 , Sweden announced that it would increase its sale of government bonds from 55…

A: When the government sale the bonds it reduces the prices of bonds because supply of bonds increases.…

Q: Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount…

A: Bonds are issued by governments and corporations when they want to raise money. Borrowers issue…

Q: Consider the following: today's interest rate for a 12-year bond is 7%; today's interest rate for a…

A: A liquidity premium is any extra compensation necessary to promote investment in assets that cannot…

Q: Assume a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of…

A: Answer - Given in the question - Year n = 10 Principal amount = $1000 Interest rate = 10% Need to…

Q: a) Graphically illustrate equilibrium in the bond market.

A: The interest rate and bond price have an inverse relationship exist between them. The price of bonds…

Q: Suppose that stock prices were to fall by 10 percent in the stock market. All else equal, would the…

A: The economy's gross domestic product is made of consumer spending, private sector spending, net…

Q: Below you will find the Demand and Supply Curves for $250,000 bonds that mature in 18 years: Qd =…

A: Given:Qd = 400,000 – 2(P)Qs = 3(P) – 100,000At…

Q: Trace the impact of selling more bonds by government on bond prices, interest rates, investment,…

A: Impact of selling bonds on various factors cam be shown as follows:   Bond prices: When the supply…

Q: prove that bond yields and bond prices are inversely related?

A: Bonds basically refers to the financial instruments in which an investor lends money to a business…

Q: Briefly describe and explain the following investments terms; g) EAR h) Amortizing i) Bond…

A: g) The Effective Annual Rate (EAR) is the pace of revenue really acquired on an investment or paid…

Q: What will happen in the bond market if the government imposes a limit on the amount of daily…

A: If the government imposes a limit on daily transactions, then the ones who buy and sell in the…

Q: efer to the diagram.  Given Dm and Sm, an interest rate of i3 is not sustainable because the:    A)…

A: Interest is charged on the principal amount for using the asset.

Q: If I am looking to purchase a bond, assuming all other factors are equal, which of the following…

A: The markets are considered to be the places where the interaction of the buyers, and sellers takes…

Q: Stock prices fell throughout much of 2007 and 2008 and many investors decided to switch their funds…

A: The switch of funds into the bonds market will increase the demand for bonds and as a result of an…

Q: Briefly describe and explain the following investments terms. d) Government Bonds e) Stocks f)…

A: d) Government Bonds: A government bond is a kind of debt instrument that is issued by the Central…

Q: If interest rates decline, which would you rather beholding, long-term bonds or short-term bonds?…

A: Long-term bonds come with a maturity span of 10 years to 30 years. In general, such bonds pay a…

Q: There is a recent issuanceof a significant number of treasury shares at a higher interest rate. How…

A: At the market a, when treasury shares are issued at higher interest rate, it implies that the…

Q: Why does longer-term bonds fluctuate more when interest rate change, than does shorter-term bonds

A: An investor's debt to a borrower is represented by a bond, which is a fixed-income investment. A…

Q: According to the table, in which year did buyers of six-month Treasury bills receive the highest…

A: According to the Fisher equation: Real interest rate = Nominal interest rate - inflation rate The…

Q: Answer the question based on the following information for a bond having no expiration date: bond…

A: The equilibrium price and quantity of bonds traded in the market are determined by the bonds market…

Q: Suppose A&K Sound System is considering building a record studio in Cayman Islands. (i) Assume that…

A: Definition: The security(bond) market is a monetary market where members can give new obligations,…

Q: Suppose the current annual interest rate on a one-year government bond is 8% and the expected annual…

A: Yearly rate (APR) alludes to the yearly premium created by a total that is charged to borrowers or…

Q: Raphael observes that at the current level of interest ratesthere is an excess supply of bonds, and…

A: The bonds and shares of a company will be purchased on the basis of the available information such…

Q: If inflation rises, why is a bond more likely to be sold at a discount to its face value? Explain,…

A: Inflation: It refers to the increase in the prices of goods and services. The more increase in the…

Q: Economists argue that bond prices and interest rates are inversely related. On a piece of notebook…

A: Solution:-  Given Data: Government offers a $1,000.00 bond, paying 10% interest for a period of 1…