Which of the following is/are correct about bonds and the bond market? Select all that apply. O U.S. corporations raise much more money issuing debt than by issuing equity. Bonds issued by corporations tend to have lower coupon rates than bonds issued by the U.S. Treasury O T-bills are zero-coupon bonds issued by banks. Zero-coupon bonds are typically sold at a premium to their face value. T-bonds are coupon bonds issued by the U.S. Treasury.

Which of the following is/are correct about bonds and the bond market? Select all that apply. O U.S. corporations raise much more money issuing debt than by issuing equity. Bonds issued by corporations tend to have lower coupon rates than bonds issued by the U.S. Treasury O T-bills are zero-coupon bonds issued by banks. Zero-coupon bonds are typically sold at a premium to their face value. T-bonds are coupon bonds issued by the U.S. Treasury.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 18QTD

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You review the characteristics of a recent corporate bond issue and notice that the issuing firm's Debt to Equity (D/E) ratio is higher than the industry average, while its Return on Equity (ROE) is lower than the industry average. If bonds issued by other firms with industry average D/E and ROE ratios have a BBB rating, you can draw the following conclusion: a. This bond is likely to have a higher rating (A or above). b. This bond is likely to have a lower rating (BB or below). c. This bond will also have a BBB rating.
when are corporations likely they called the Bonds? A. When the market interest rate is higher than the contract rate, b. When the contract rate is higher than the market rate. C. When their bonds at selling at par with market d. When standard and poor are bullish about treasury bills E. None of the above
Which of the following statements is CORRECT? a. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices. b. The total yield on a bond is derived from dividends plus changes in the price of the bond. c. Bonds are generally regarded as being riskier than common stocks, therefore bonds have higher required returns. d. Bonds issued by larger companies always have lower yields to maturity (due to less risk) than bonds issued by smaller companies. e. The market price of a bond will always approach its par value as its maturity date approaches, provided the bond's required return remains constant. THE ANSWER IS NOT E OR B, apparently, but please let me know if you really think one of those choices are correct.
Please describe the different type of bonds and compare the yields associated with each type of bonds?Which factors influence the yield of each type of bonds? Which type of bond is associated with the lowest yield/interest rate out of all outstanding bonds during a particular time period? How the Fed could influence the bond yields? Would you expect bond yields/interest rates to be negative in either nominal or real terms? If so, can you provide such an example?
True or False: Corporations are very interested in their potential bond rating as it impacts their cost of capital. The spread of a bond is common term used by investors. The spread of a bond is that additional compensation for the risk of a bond (relative to a risk free rate). The spread on Junk or High Yield Bonds is generally higher than the spread on bonds rated BBB or higher.
Explain why corporate bonds always yield more than Treasury bonds and whyBBB-rated bonds always yield more than AA-rated bonds.
Let's say that the data shows how the spread between the interest rates on corporate bonds and U.S. treasury bonds has been very large during the Covid - 19 pandemic . What would explain this difference ? Use the bond supply and demand analysis to answer this question . Be as specific as you can be and make sure you explain the channels clearly?
Which of the following statements is CORRECT? a. Convertible bonds generally have lower coupon rates than non-convertible bonds of similar default risk because they offer the possibility of capital gains. b. A debenture is a secured bond that is backed by some or all of the firm's fixed assets. c. Junk bonds typically provide a lower yield to maturity than investment-grade bonds. d. A company's subordinated debt has less default risk than its senior debt. e. Senior debt is debt that has been more recently issued, and in bankruptcy it is paid off after junior debt because the junior debt was issued first.
Which of the following is a disadvantage to a corporation issuing bonds? Group of answer choices A)The required interest payment must be met each period. B)The liquid nature of the bonds makes them attractive to investors who may not want to hold them to maturity. c)The large principal payment due at maturity. d)Both the first and third answers above are both disadvantages. e)The first, second and third answers above are all disadvantages.
Which of the following statements is not correct? a) The export value of the bond; the value the investor pays when buying bonds b) Nominal value of the bond; is the value written on the bond c) Another reason for the difference in bond market prices is the dividend paid to bonds. d) Periodic interest amounts on bonds are calculated at nominal value. e) Market value of a bond is equal to the present value of the interest to be paid by the bond and the principal amount to be paid at the end of maturity. ------------------ What is the market value of İdil Gıda's bond with a nominal value of 15000 USD, maturity of 3 years and 30% annual interest payment, assuming that the desired yield rate is 36%? a) 12500b) 13494c) 9000d) 5456e) 7594 ============ What is the market value of Beril Gıda A.Ş.'s bond with a nominal value of USD 12,000, maturity of 5 years and an annual interest payment of 25%, when the desired rate of return is 25%? a) 18000b) 15000c) 12000d) 16000e)…
If CDS spreads widen, does that increase, decrease, or have no effect on the credit spread of a corporate bond?
Which of the following is FALSE regarding bonds? The yield to maturity is the return an investor would earn if she buys the bond at the current price and holds it to maturity, collecting all of the promised coupon payments and the par value at maturity bond holders vote to elect members to the board of directors a bond indenture includes all of the basic terms of a bond issue bondholders have legal recourse if a company fails to make the promised interest payments or the par value at maturity corporate bonds usually have a fixed coupon rate with semi-annual interest payments.