Why are junk bonds riskier than investment grade bonds? How do investors in junk bonds reduce their risk exposure?
Why are the GSEs said to be characterized by moral hazard? Any evidence that this is a serios problem?
Why are junk bonds riskier than investment grade bonds? How do investors in junk bonds reduce...
What ratings comprise investment-grade bonds and what ratings are used for junk bonds? What are the primary differences between the two? In particular, why are investment-grade bonds more marketable and why are junk bonds issued at all? Clearly state your answer to each problem. Answers without justification/explanation will not be given credit
14. Junk bonds are bonds that are rated less than investment grade by bond-rating agencies a) True b) False 15. A secured loan has a claim to specific assets ofthe borrower in the case of default. a) True b) False 16. In a conventional interest rate swap agreement, the swap buyer agrees to make a number of fixed interest rate payments to the swap seller a) True b) False 17. Currency swaps can be designed to reduce foreign exchange risk....
Investment grade rated countries (IG) have, typically, higher yields than high yield, HY, (AKA junk bonds or speculative grade), since HY bonds' default probability is Lower than the IG's. Group of answer choices True False
What are the ratings of investment grade bonds, and at what rating does 'junk' begin? What factors separate the two types of bonds? Which type of bond do you think will pay higher interest?
1. What does a firm’s liquidity measure? Why do investors analyze liquidity? How does liquidity relate to risk? 2. What does a firm’s solvency measure? Why is a high level of debt relative to equity considered riskier? 3. How do firms report assets on the balance sheet under IFRS?
What do investors sometimes use
as a proxy for the risk-free rate?
6) What do investors sometimes use as a proxy for the risk-free rate? 7) How would you define the market risk premium? 8) Given the following historical returns, what was the historical risk premium of Corporate bonds?, what was the historical risk premium for Small stocks?, What was the historical risk premium for the "Market"? Corporate bonds: 6.6% Inflation: 3% S&P 500: 11.5% Treasury Bills: 4.5% Treasury bonds:...
Discuss which type of risk matters to rational investors and why. In addition, explain how investing in more than one asset can reduce risk through diversification. short and correct answer please
Do
bonds reduce the overall risk of an investment portfolio? Let x be
a random variable representing annual percent return for the
Vanguard Total Shock Index (all Stocks). Let y be a random variable
representing annual return for the Vanguard Balanced Index (60%
stock and 40% bond). For the past several years, assume the
following data. Compare
Question 7 Not yet answered Points out of 4.00 P Flag question Do bonds reduce the overall risk of an investment portfolio? Let...
chapter 2: ANSWER THE FOLLOWING QUESTIONS
QUESTIONS 1. Why is a share of Microsoft common stock an asset for its owner and a liability for Microsoft? 2. If I can buy a car today for $5,000 and it is worth $10,000 in extra income next year to me because it enables me to get a job as a traveling anvil seller, should I take out a loan from Larry the loan shark at a 90% interest rate if no one...
Why is it the case that governments and non-profit organization typically do not invest in bonds? Select one: a. Bonds have the dual sources of risk related to market fluctuations and risk due to reputation of the issuer. b. Investors take on lower yields in order to benefit from their tax-exempt status, a benefit that is not useful to governments and most non-profits. c. Investment in bonds is prohibited by provisions of the Sarbanes-Oxley Act. d. All of the above....