Bonds are assigned ratings that reflect
Question 7 options:
The value of the rate of return |
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The risk/return ratio |
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The probability of going into default |
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Restrictive covenants |
Bonds are assigned ratings that reflect Question 7 options: The value of the rate of return...
The quality ratings assigned to bonds reflect the: A. probabilities of different returns on their sinking fund investments. B. probabilities of their maturity value becoming lower than the principal value. C. probabilities of their being recalled by the exercise of a call provision. D. probability of their face value increasing to above their market value. E. probabilities of their going into default.
Bond ratings classify bonds based on: interest rate, inflation rate, and default risk. liquidity, interest rate, and default risk. liquidity, market, and default risk. default risk only. default and liquidity risks.
Rating agencies-such as Standard& Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital. Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is likely to be classified as an investment-grade bond? O A bond whose issuer has a...
7. Bond ratings Rating agencies such as Standard & Poor's (S&P), MoodyInvestor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital nome e anche classified Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is kely to be investment-grade bond? A bond...
A Corporation's 20-year bonds have an equilibrium rate of return of 8.00 percent. For all securities, the inflation risk premium is 1.52 percent and the real interest rate is 3.27percent. The security's liquidity risk premium is .32 percent and maturity risk premium is .77 percent. The security has no special covenants. What is the bond's default risk premium?
6.2)Dakota Corporation 15-year bonds have an equilibrium rate of return of 10 percent. For all securities, the inflation risk premium is 1.80 percent and the real risk-free rate is 3.60 percent. The security’s liquidity risk premium is 1.25 percent and maturity risk premium is 1.85 percent. The security has no special covenants. Calculate the bond’s default risk premium. (Round your answer to 2 decimal places.) Default risk premium______
Dakota Corporation 15-year bonds have an equilibrium rate of return of 10 percent. For all securities, the inflation risk premium is 1.45 percent and the real risk-free rate is 2.90 percent. The security’s liquidity risk premium is 0.55 percent and maturity risk premium is 1.15 percent. The security has no special covenants. Calculate the bond’s default risk premium. (Round your answer to 2 decimal places.)
Dakota Corporation 15-year bonds have an equilibrium rate of return of 9 percent. For all securities, the inflation risk premium is 1.40 percent and the real risk-free rate is 2.80 percent. The security’s liquidity risk premium is 0.50 percent and maturity risk premium is 1.10 percent. The security has no special covenants. Calculate the bond’s default risk premium. (Round your answer to 2 decimal places.)
10. Bond ratings Rating agencies-such as Standard & Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital. Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is likely to be classified as an investment-grade bond? O A bond...
1st blank options = par value, coupon payment, price 2nd blank options = bankruptcy, default, liquidation 3rd blank options = convertible provision, sinking fund provision, call provision 4th blank options= call provision, call premium, convertibility provision 5th blank options = floating-rate, fixed-rate 6th blank options = indenture, trustee, debenture 7th = multiple choice 1. Characteristics of bonds To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond's_ par...