When a firm gets riskier what will happen to its bonds Multiple Choice the stated interest rate of the bonds will not change the stated interest rate of the bonds will go up there is no definite answer the stated interest rate of the bonds will go dow
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When a firm gets riskier what will happen to its bonds
-
the stated interest rate of the bonds will not change
-
the stated interest rate of the bonds will go up
-
there is no definite answer
-
the stated interest rate of the bonds will go down
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- When a firm gets riskier what will happen to its bonds Multiple Choice the market interest rate of the bonds will go up and the price of the bonds will go up the market interest rate of the bonds will go down and the price of the bonds will go up the market interest rate of the bonds will go down and the price of the bonds will go down the market interest rate of the bonds will go up and the price of the bonds will go down there is no definite answerExplain how does a bond par value differs from its market value? Are variable rate bonds attractive to investors who expect the interest rates to decrease? Explain. Would a firm that needs to borrow funds consider issuing variable rate bonds if it expects interest rates to decrease in the future? Explain.Price risk is the risk that Select one: a. the bond principal will not be paid in full or on time. b. market prices increase due to market interest rate changes making bonds more expensive to purchase. c. the bonds in a dedicated portfolio will decrease in value in response to an increase in interest rates. d. the yield-to-maturity will be less than the inflation risk causing the real rate of return to be negative. e. coupon payments will be reinvested at a rate that is less than the bond's yield-to-maturity
- Can I use the yield to maturity (YTM) on a bond issued by the company as the cost of debt? A Yes, you can use the YTM B No, you cannot use the YTM C Only if the bond is liquid and has not special feature embedded in it D There is not enough information to answer this problemPrice of short-term bond are less volatile than long-term bonds. But yield to maturity of long-term bonds are less volatile than short-term bonds. How do you reconcile these observations? View keyboard shortcutsWhich of the following events would make it more likely that a company would choose to call it’s outstanding callable bonds? An increase in market interest rates. An increase in the call premium. All the other statements are correct. The company’s bonds are downgraded. A reduction in market interest rates.
- The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates changeLong-term bonds fluctuate more than short-term bonds as interest rates rise, making them a riskier investment. When interest rates rise, bond prices fall. A bond's coupon rate or interest rate determines the annual payment to the issuer. what does this mean?Under which of the following situation, would a firm most likely to call its outstanding callable bonds? Group of answer choices a)The firm has financial distress. b)The company’s bonds are downgraded. c)The market interest rate increases d)The market interest rate declines
- Describe the relationship between bond prices and inclation. would you be more inclined to buy bonds if you anticipate interest rates to rise fall.Interest rate risk; a.is lesser for bonds with a longer term as compared to bonds with a shorter term b.is the risk that the market interest rate may remain constant c.is the risk that a bond's coupon rate may change over time d.is zero on the date of maturity of a bondRate the following statement as True of False: "Although, Convexity is listed as a 'risk' to bond investors, it is actually a benefit to investors who own bonds. This is because when a bond has high convexity an investor will make more money for a given drop in interest rates, than he or she will lose given the same magnitude increase in interest rates. Thus, more convexity means more potential upside relative to downside for a bond investor, given that yields are equally likely to move up or down by the same amount." True of False?