For a given change in interest rates, market prices of bonds move in an inversely proportional...
Homework Answers
Ans : Duration Value is higher
Reason: If a bond is having a longer duration then it will have a higher change in there price because a bond can not be redeemed immediately and the buyer needs to hold the same even there is a increase in the interest rate , making the price of interest fall more than the change in interest rate in real.
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For a given change in interest rates, market prices of bonds
move in an inversely proportional...
For a given change in interest rates, market prices of bonds move in an inversely proportional...
For a given change in interest rates, market prices of bonds move in an inversely proportional manner with interest rate by a higher degree if Duration value is lower Duration value is higher If the amount of Equity is higher If the amount of Equity is lower What is of the following about Duration is correct? Duration is the weighted average time needed to receive the present value of the cash flows duration is the same as the time of maturity...
The prices of low-coupon bonds tend to be less sensitive to a given change in interest...
The prices of low-coupon bonds tend to be less sensitive to a given change in interest rates than high coupon bonds, other things held constant. O O True False There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns increase as the bond ratings get lower. O True or False What's TRUE regarding long-term and short-term bonds (assume they have the same par...
Bonds are a form of ________, with bond prices and interest rates that move in _________...
Bonds are a form of ________, with bond prices and interest rates that move in _________ . a.equity; the same direction b.equity; opposite directions c.debt; the same direction d.debt; opposite directions e.equity/debt split; sometimes the same direction and sometimes opposite directions If the yield to maturity on a bond is greater than its coupon rate, then a.the corresponding bond price will be greater than its par (face) value. b.the corresponding bond price will be equal to its par (face) value....
6) Which of the following statements about bonds is true? A) If market interest rates are...
6) Which of the following statements about bonds is true? A) If market interest rates are above a bond's coupon interest rate, then the bond will sell below its par value. B) As the maturity date of a bond approaches, the market value of a bond will become more volatile. C) Bond prices move in the same direction as market interest rates. D) Long-term bonds have less interest rate risk than do short-term bonds.
The aftertax cost of debt: Multiple Choice varies inversely to changes in market interest rates. will...
The aftertax cost of debt: Multiple Choice varies inversely to changes in market interest rates. will generally exceed the cost of equity if the relevant tax rate is zero. will generally equal the cost of preferred if the tax rate is zero. is unaffected by changes in the market rate of interest. is highly dependent upon a company's tax rate.
Q6. WHY ARE INTEREST RATES INVERSELY PROPORTIONAL TO THE MONEY SUPPLY, PRINTED BY THE BANK OF...
Q6. WHY ARE INTEREST RATES INVERSELY PROPORTIONAL TO THE MONEY SUPPLY, PRINTED BY THE BANK OF CANADA? WHAT ARE THE FUNCTIONS OF THE BANK OF CANADA? WHAT ARE THE TWO TYPES OF DEMAND FOR OUR MONEY? WHAT IS THE EQUILIBRIUM OF THE MONEY SUPPLY?
Which of the following is correct about interest movements and inflation? a. Interest rates move inversely...
Which of the following is correct about interest movements and inflation? a. Interest rates move inversely with inflation. b. Interest rates vary directly with expected inflation. c. Interest rates vary directly with past inflation rates. d. Inflation is impacted by expected interest rates.
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate...
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
The Fed controls interest rates to either tighten or loosen the economy. When the Feds are...
The Fed controls interest rates to either tighten or loosen the economy. When the Feds are needing to tighten the economy, they will raise the interest rates. When interest rates are changed, it sends a ripple effect through the entire financial market. When interest rates rise, cost of capital and borrowing increase. Consumers will borrow and spend less. This will lead to a slower economy and help to hedge inflation. However, the change in interest rates can affect the market...
13) When interest rates change, the prices of short-term bonds will change more than those of...
13) When interest rates change, the prices of short-term bonds will change more than those of long-term bonds. A) True B) False
The prices of low-coupon bonds tend to be less sensitive to a given change in interest rates than high coupon bonds, other things held constant. O O True False There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns increase as the bond ratings get lower. O True or False What's TRUE regarding long-term and short-term bonds (assume they have the same par...
6) Which of the following statements about bonds is true? A) If market interest rates are above a bond's coupon interest rate, then the bond will sell below its par value. B) As the maturity date of a bond approaches, the market value of a bond will become more volatile. C) Bond prices move in the same direction as market interest rates. D) Long-term bonds have less interest rate risk than do short-term bonds.
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
13) When interest rates change, the prices of short-term bonds will change more than those of long-term bonds. A) True B) False
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