Q: The face value or the amount returned to the bondholder at maturity is known as the coupon…
A: a) Coupon interest rate is paid periodically not at the time of maturity
Q: Discuss MM proposition II under the situation when there are corporate taxes and risk-free debt.
A: Corporate tax is defined as the tax on the corporate's tax. Here, taxes used to make the payment on…
Q: Define junk bonds and explain how junk bonds became an important factor in corporate bond market.
A: The corporation and government can raise finance by issuing bonds. The borrower i.e bond issuer is…
Q: Which of the following is/are correct about bonds and the bond market? Select all that apply. O U.S.…
A: T-bills are short term money market instrument issued by US treasury generally bearing fixed…
Q: In which market environment does the issuance of a callable bond make more sense from a corporate…
A: A bond is a debt security that is sold by a business entity to borrow long-term funds. Generally,…
Q: Why are U.S. Treasury bonds not completely riskless?
A: Answer: Usually, government issues treasury bonds (T-bonds). All the investment including treasury…
Q: If a new competitor with scale enters, does that increase, decrease, or have no effect on the credit…
A: solution concept credit spread The term Credit spread is widely used while assessing…
Q: Which of the following has the highest interest rate? Select one: O a. Corporate Bond b. Government…
A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…
Q: When CDS spreads on the company widen, does that increase, decrease, or have no effect on the credit…
A: Answer are as follows.
Q: Which of the following bond is the safest? Treasury Bonds Corporate Bonds Savings Bonds
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Q: Write the differences between treasury bill and corporate bond
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Q: 8. Suppose one of the ratings agencies (S&P, Moody's, Fitch) upgrades the rating of a bond from BBB…
A: In this question we have three parts and we need to answer them.
Q: Explain what a corporate bond is b. Outline the characteristics of the bond market d. Explain the…
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Q: Which of the following are traded in money markets? banker’s acceptances all Treasury securities…
A: Money market instrument means those instrument which are issued in money market and generally for…
Q: Should financial institutions invest in junk bonds?
A: The answer for the theory question on junk bonds is discussed hereunder. Dear student, As you have…
Q: Why do most municipal bonds pay lower interest than riskless Treasury bonds?
A: Municipal as well as Treasury bonds are backed by the government and therefore are less risky. The…
Q: Why the existence of rating agencies has lowered returns on corporate bonds?
A: Rating agencies are organizations the access the credit risk of organizations and rate them…
Q: Does a steady low-volatility environment, increase, decrease, or have no effect on the credit spread…
A: answer are as follows.
Q: Discuss the functioning and merits of callable and puttable bonds from an investor’s perspective
A: “Since you have posted multiple questions, we will solve first question for you. If you want any…
Q: Does a steady low-volatilty enviroment, increase, decrease, or have no effect on the credit spread…
A: If we closely observe we can find out that there are number of participants in a financial market.…
Q: When the firm gets acquired by a better fundamental company, does that increase, decrease, or have…
A: A credit spread is the difference in yield of a US Treasury security and the yield on a corporate…
Q: Treasury bonds carry high default risk because government has the option not to pay its…
A: Treasury bonds are risk free bond that are issued by the government of the country like US Fed.…
Q: LExplain what happens to the bond price and interest rate and why. i) i1) ii1) Expected inflation…
A: A bond's price is the present discounted value of its future cash flow. It denotes the total of the…
Q: 1.The first thing that the bank consider prior calling a bond issued a. lower interest in the…
A: As per Bartleby guidelines, since you have posted multiple questions, first 1 question will be…
Q: Bond prices
A: Option b is wrong because it is a true statement. Every bond bears a fixed rate of interest which…
Q: Why are U.S. Treasury bonds not riskless?
A: A bond is a debt instrument with which a shareholder credits cash to an entity, which can be a…
Q: Under what conditions will it take on bank debt?
A: Debt financing happens while an enterprise increases cash by selling debt instruments to…
Q: If CDS spreads widen, does that increase, decrease, or have no effect on the credit spread of a…
A:
Q: What are the reasons for issuing convertible bonds rather than straight debt?
A: Convertible bonds: Convertible bonds are a kind of bonds that can be easily converted into…
Q: These are corporate bonds that have a higher rate of return with a higher level of risk?
A: The rate of return is the expression in the percentage of the gain or loss on investment against the…
Q: Explain why corporate bonds always yield more than Treasury bonds and whyBBB-rated bonds always…
A: Bonds are financial instruments that provide fixed returns to its holders. Bonds actually have a…
Q: The nominal interest rate of a corporate bond includes all of the following components EXCEPT _____.…
A: Nominal interest rate of a corporate bond = real risk free interest rate + expected inflation +…
Q: when are corporations likely they called the Bonds? A. When the market interest rate is higher than…
A: The bonds are the financial instruments issued to raise money from the market.
Q: 5. If bonds issued by a corporation are sold at a discount, is the market rate of interest greater…
A: The corporation can issue the bond at discounts or premiums as per the market conditions and…
Q: How does the credit spread change with the bond rating? Why?
A: Introduction: The term credit spread can be defined as the variation in returns between two…
Q: What is a bond?
A: Hey, since there are multiple questions posted, we will answer first question. If you want any…
Q: The yields on a corporate bond differ from those on a comparable treasury security primarily because…
A: In the world of fixed income instruments and debt instruments there are two main types of…
Q: t are the advantages and disadvantages of buying bonds directly?
A: A bond is a fixed-income instrument that represents an investor's loan to a borrower (typically…
Q: Which of the following is not a Money Market Instruments? a. Corporate Bonds b. Bankers’ Acceptance…
A: Answer shares and bonds having maturity of more than one year are not considered as money market…
Q: Why do short-term debt securities issued by private companies generally offer higher yields than…
A: Short term debt securities are referred as the securities, which are issued within 12 months to the…
Q: What types of advantages or expertise should an investment bank have to be competitive in the…
A: Investment bank is the service providing institute which plays a role of middleman between investors…
Q: If bonds issued by a corporation are sold at a discount, is the market rate of interest greater or…
A: Identify the market rate of interest.The market rate of interest of bonds is greater than the…
1. When inflation increases, does that increase, decrease, or have no effect on the credit spread for a corporate bond?
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Solved in 2 steps
- 1. When the Fed purchases treasuries to supply market liquidity, does that increase, decrease, or have no effect on the credit spread for a corporate bond?1. When CDS spreads on the company widen, does that increase, decrease, or have no effect on the credit spread for a corporate bond?If CDS spreads widen, does that increase, decrease, or have no effect on the credit spread of a corporate bond?
- Does a steady low-volatilty enviroment, increase, decrease, or have no effect on the credit spread for a corporate bond?If a new competitor with scale enters, does that increase, decrease, or have no effect on the credit spread for a corporate bond?Which of the following events would make it more likely that a company would call its outstanding callable bonds? State your reason for the answer. The company’s bonds are downgraded. Market interest rates rise sharply. The company's financial situation deteriorates significantly. Inflation increases significantly. Market interest rates decline sharply
- Higher interest rates on treasury bonds Identify whether it: (Select one choice per number) (A) increase inflation(B) decrease inflation(C) does not directly affect economic growth or cannot be determinedA company has the greatest incentive to call its outstanding callable bonds when: A. Many interest rates rise sharply B. Market interest rates decline sharply C. Inflation increases significantly D. The company's bonds are downgraded (bond ratings decline).1. Why do short-term debt securities issued by private companies generally offer higher yields than treasury bills issued by central governments?
- Why might a company choose to raise money through bonds, rather than take out a note payable or issue stock? What are the advantages and disadvantages of bonds? What does it mean to issue a bond at a "premium" or at a "discount"?Explain the impact of a decline in interest rates on the prices of existing bonds.The values of Treasury bonds can change widely with changes in interest rates. True False