one of the forces that may reduce the agency problem is the bond market market for...

Question

Question

one of the forces that may reduce the agency problem is the
bond market
market for corporate control
futures market
change in interest rates

Answer 1

Answer #1

The force that may reduce the agency problem is the "market for corporate control".

Agency problem usually refers to a conflict of interest between company management & company stockholders.

Answer 2

Similar Homework Help Questions

Hedgers use the futures markets to reduce price risk. Which of the following is not an...

Hedgers use the futures markets to reduce price risk. Which of the following is not an example of hedging? Multiple Choice An importer with USD payables sells a USD futures contract. A fund manager sells a share market index futures contract. A long-term lender buys a 10-year Treasury bond futures contract. A corporate borrower sells a 90-day bank bill futures contract.
A bond fund currently holds a bond portfolio with a face value of $10 million....

A bond fund currently holds a bond portfolio with a face value of $10 million. The current market value of the portfolio is only 92.2% of face, however. The fund’s managers anticipate a rise in bond yields (interest rates) in the near future, so they desire a T-bond hedging strategy to protect themselves. Given their rate expectations, should they short or go long in T-bond futures? Explain. The risk managers use $100,000 face value T-bond contracts. If they use...
4. Which one of the following Bonds is Most sensitive to changes in market "Interest rates? a.) 1 Year Treasury Bil...

4. Which one of the following Bonds is Most sensitive to changes in market "Interest rates? a.) 1 Year Treasury Bill c) 15 Year Corporate Bond b.) 10 Year Treasury Note d.) 30 Year Corporate Bond

If market interest rates increase, investors in corporate bonds will see the current market value of...

If market interest rates increase, investors in corporate bonds will see the current market value of their bonds do what in the secondary market? a. If the market interest rates increase, the coupon rate on the bond increases b. When market interest rates increase, the market value of corporate bonds increase c. Remain the same, because the face value never changes d. When market interest rates increase, the market value of corporate bonds decrease
A bond sold one month ago for $990. The bond is worth $930 in today's market....

A bond sold one month ago for $990. The bond is worth $930 in today's market. Assuming no changes in risk, which one of the following is true? Interest rates must be higher now than they were one month ago. The coupon payment of the bond must have decreased. The face value of the bond must be $990. The bond's current yield has decreased from one month ago.
A firm has a corporate bond traded in the secondary market. The maturity of this bond...

A firm has a corporate bond traded in the secondary market. The maturity of this bond is 5 years and annual coupon interest rate is 12.5%. The bond pays annual coupons and par value is 100$. The market price of this bond is 94.5$. The expected dividend for the next year is 0.75$ per share and the market price of one share is 12$. The corporate tax rate is 20%, the beta of the firm is 1.1, the risk free...

The bond market 16. Your company owns the following bonds: Bond Market Value Duration $13 milliorn...

The bond market 16. Your company owns the following bonds: Bond Market Value Duration $13 milliorn $18 million $20 million 4 If general interest rates rise from 8% to 8.5%, what is the approximate change in the value of the portfolio? (Review Chapter 3.)
A bond future currently bond portfolio with a face value $10 million. The current market value...

A bond future currently bond portfolio with a face value $10 million. The current market value of the portfolio is only 92.2% of face, however. The fund managers anticipate a rise in bond yield in the near future so they desire a T-bond hedge strategy to protected themselves. Given their rate expectations, should they short or go long in T-bond futures? Explain The risk manager use $100,000 face value T bond contracts. If they use a 1-1 (naïve) hedge ration...
An investor purchases one municipal bond and one corporate bond that pay rates of return of...

An investor purchases one municipal bond and one corporate bond that pay rates of return of 4% and 5.5%, respectively. If the investor is in the 20% tax bracket, his after-tax rates of return on the municipal and corporate bonds would be, respectively, _____.

Molly is an aggressive bond trader who likes to speculate on interest rate swings. Market interes...

Molly is an aggressive bond trader who likes to speculate on interest rate swings. Market interest rates are currently at 10.0% , but she expects them to fall 8.0% within a year. As a result, Molly is thinking about buying either a 25-year, zero-coupon bond or a 20-year, 8.5% bond. (both bonds have $1000 par value and carry the same agency rating.) Assuming that Molly wants to maximize capital gains, which of the two issues should she select? What if...