Questions a) Corporations do not receive any funds from investors when their bonds are re-sold in a secondary market. Nonetheless corporations prefer that their bonds trade in a secondary market that is more liquid rather than less liquid (or “illiquid”). Explain why that is the case. No diagram is needed to answer this question. b) If investor’s revise their expectations and now expect that Canada’s inflation rate will increase over the next ten years, what impact will this have on the slope of the yield curve? Briefly explain.
Questions a) Corporations do not receive any funds from investors when their bonds are re-sold in a secondary market. Nonetheless corporations prefer that their bonds trade in a secondary market that is more liquid rather than less liquid (or “illiquid”). Explain why that is the case. No diagram is needed to answer this question. b) If investor’s revise their expectations and now expect that Canada’s inflation rate will increase over the next ten years, what impact will this have on the slope of the yield curve? Briefly explain.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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a) Corporations do not receive any funds from investors when their bonds are re-sold in a secondary market. Nonetheless corporations prefer that their bonds trade in a secondary market that is more liquid rather than less liquid (or “illiquid”). Explain why that is the case. No diagram is needed to answer this question.
b) If investor’s revise their expectations and now expect that Canada’s inflation rate will increase over the next ten years, what impact will this have on the slope of the yield curve? Briefly explain.
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