Homework Answers
Answer: The second option is correct.
Junk bonds will have higher yield to maturity because they carry
higher risk compared to investment grade bonds.
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Question 3 (1 point) Which of the following statements is correct? Subordinated debt has less default...
Which of the following statements is FALSE of bonds without the following features? Secured debt has...
Which of the following statements is FALSE of bonds without the following features? Secured debt has lower coupons A bond with a sinking fund has lower coupons. A callable bond has a higher coupon Subordinate debt has higher coupons. Senior, secured debt has higher coupons.
Asset based lending is commonly used to finance leveraged buyouts. Which of the following is not...
Asset based lending is commonly used to finance leveraged buyouts. Which of the following is not true about such financing? The borrower generally pledges tangible assets as collateral. Lenders look at the target firm’s assets as their primary protection. Bank loans are secured frequently by receivables and inventory. Loans maturing in more than one year are often referred to as term loans. The target firm’s most liquid assets generally secure longer-term loans. Security provisions and protective covenants are included in...
questions 1-4 please 1. Why do callable bonds usually pay a higher coupon rate than noncallable...
questions 1-4 please
1. Why do callable bonds usually pay a higher coupon rate than noncallable bonds? A. To compensate investors for their extra tax liability B. Because callable bonds have greater default risk than noncallable C. To compensate investors who might suffer a loss as a result of their bonds being called D. To comply with SEC regulations E. None of the above 2. You own a convertible bond issued by MJ9 Corporation that can be exchanged for 60...
QUESTION 18 Which of the following statements is CORRECT? 1. An investor can eliminate virtually all...
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
1. Why do callable bonds usually pay a higher coupon rate than noncallable bonds? A. To...
1. Why do callable bonds usually pay a higher coupon rate than noncallable bonds? A. To compensate investors for their extra tax liability B. Because callable bonds have greater default risk than noncallable C. To compensate investors who might suffer a loss as a result of their bonds being called D. To comply with SEC regulations E. None of the above 2. You own a convertible bond issued by MJ9 Corporation that can be exchanged for 60 shares of the...
Which of the following statements is CORRECT? 1. The yield on a 3-year Treasury bond cannot...
Which of the following statements is CORRECT? 1. The yield on a 3-year Treasury bond cannot exceed the yield on a 10‑year Treasury bond. 2. The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond. 3. The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond. 4. The yield on a 10-year AAA-rated corporate bond should always exceed the yield on a 5-year AAA-rated corporate bond....
13. According to PowerPoint slides, which of the following are the largest supplier of loanable funds?...
13. According to PowerPoint slides, which of the following are the largest supplier of loanable funds? A. corporations B. foreign governments C. households D. international markets 14. A rise in inflation generally puts -pressure on interest rate by shifting supply of funds inward and demand for funds outward. A. downward B. upward C. liquidity D. default 15. The yields on debt securities are affected by: A. default risk B. liquidity risk C. term to maturity D. all of the above...
1. Which of the following statements is most correct? me money is readily available and the...
1. Which of the following statements is most correct? me money is readily available and the cost of retained earnings is usually a lot cheaper than the cost of debt financing higher . Firms often call in bonds that can be reissued at lower interest rates. Thus, bonds seling at a significant premium discount are most eligible to be called by the issuing company. c. Il a company's tax rate increases but the yield to maturity of its non-callable bonds...
Which of the following statements is CORRECT? a. The market price of a bond will always...
Which of the following statements is CORRECT? a. 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. b. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices. c. The total yield on a bond is derived from dividends plus changes in the price of the bond. d. Bonds are generally regarded...
10. Which of the following must total to 100 percent? I. rates of return for the...
10. Which of the following must total to 100 percent? I. rates of return for the various economic states II. portfolio weights Ⅲ. probabilities of occurrence for the various economic states IV. betas of the individual securities held within a portfolio A). I and III only B). II and IV only C). II and III only D). II, III, and IV only E). I, II, III, and I 11. Which of following statements is correct, everything else equal? A) B)...
Which of the following statements is FALSE of bonds without the following features? Secured debt has lower coupons A bond with a sinking fund has lower coupons. A callable bond has a higher coupon Subordinate debt has higher coupons. Senior, secured debt has higher coupons.
questions 1-4 please
1. Why do callable bonds usually pay a higher coupon rate than noncallable bonds? A. To compensate investors for their extra tax liability B. Because callable bonds have greater default risk than noncallable C. To compensate investors who might suffer a loss as a result of their bonds being called D. To comply with SEC regulations E. None of the above 2. You own a convertible bond issued by MJ9 Corporation that can be exchanged for 60...
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
1. Why do callable bonds usually pay a higher coupon rate than noncallable bonds? A. To compensate investors for their extra tax liability B. Because callable bonds have greater default risk than noncallable C. To compensate investors who might suffer a loss as a result of their bonds being called D. To comply with SEC regulations E. None of the above 2. You own a convertible bond issued by MJ9 Corporation that can be exchanged for 60 shares of the...
13. According to PowerPoint slides, which of the following are the largest supplier of loanable funds? A. corporations B. foreign governments C. households D. international markets 14. A rise in inflation generally puts -pressure on interest rate by shifting supply of funds inward and demand for funds outward. A. downward B. upward C. liquidity D. default 15. The yields on debt securities are affected by: A. default risk B. liquidity risk C. term to maturity D. all of the above...
1. Which of the following statements is most correct? me money is readily available and the cost of retained earnings is usually a lot cheaper than the cost of debt financing higher . Firms often call in bonds that can be reissued at lower interest rates. Thus, bonds seling at a significant premium discount are most eligible to be called by the issuing company. c. Il a company's tax rate increases but the yield to maturity of its non-callable bonds...
10. Which of the following must total to 100 percent? I. rates of return for the various economic states II. portfolio weights Ⅲ. probabilities of occurrence for the various economic states IV. betas of the individual securities held within a portfolio A). I and III only B). II and IV only C). II and III only D). II, III, and IV only E). I, II, III, and I 11. Which of following statements is correct, everything else equal? A) B)...
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