If the State of California issued a state government bond with a BB- rating, then their bonds should be very safe and secure. (Mark False - This Is False - Gee Thanks Mr. Torres !). True or False True False
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- Explain why a financial investor in stocks cannot earn high capital gains simply by buying companies with a demonstrated record of high profits.Explain why you agree or disagree with the following statements:A. “A bond issued by a corporation of the highest credit rating can qualify as a risk-free asset.”B. “A five-year U.S. Treasury note would qualify as a risk-free asset because of its guarantee by the U.S. government.”When the economy is expected to enter into a recession, a BB rated bond would A be impossible to sell B show a higher yield than when the economy was stronge C likely default very soon D be converted to a zero-coupon bond
- Explain what the term "bond price elasticity" means. Would bond price elasticity indicate that zero-coupon or high-coupon bonds with the same yield to maturity have a greater price sensitivity? Why? What does this mean for the market value volatility of zero-coupon Treasury bonds vs high-coupon Treasury bonds in mutual funds?Imprudential, Inc., has an unfunded pension liability of $414 million that must be paid in 19 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 7.9 percent, what is the present value of this liability?An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for 1 year bonds can be estimated using the following equations:Demand: Price = (-0.5)*Quantity + 930Supply: Price = Quantity + 500Assume the face of the bond is $1,000.1. What is the expected equilibrium price and quantity of bonds in this market to 4 decimal places? Price$ Quantity 2. Given your answer to part (a), which is
- True or False: With a discount bond, the return on thebond is equal to the rate of capital gain.Below you will find the Demand and Supply Curves for $250,000 bonds that mature in 18 years: Qd = 400,000 – 2(P) Qs = 3(P) – 100,000 What is the current equilibrium interest rate in that bond market?True or False: In the case of a discount bond, the bond's return matches the rate of capital gain.
- The demand curve and supply curve for one‐year discount bonds with a face value of R1,000 are represented by the following equations (round your responses‐quantity and price to the nearest whole number and the interest rate to two decimal places where applicable). Bd: P = −0.6 * Q + 1200 Bs: P = Q + 800 Where Bd, Bs , P and Q are bond demand, bond supply, price and quantity respectively. Calculate the expected equilibrium price and quantity of bonds in this market and what is the expected interest rate in this market?Bonds issued by corporations and exposed to default risk are classified as A. corporation bonds B. default bonds C. risk bonds D. zero risk bondsshow and explain the impact of the interest rates policy implemented in Trindad and Tobago due to covid-19
