1.
A bond whose issuer has a 30% return on capital, a total debt to total capital ratio of 15%, and a 6% yield
2.
Decrease
3.
Increase
4.
=9.20%-7.50%-0.60%=1.10%
Rating agencies-such as Standard& Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds...
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...
10. Bond ratings Aa Aa 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 a junk bond? OA...
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...
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 a junk bond? A bond with a B...
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon Government of Canada bond with two years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 9.90%....
Could you please help me solve problem E7-33. Assessing the Effects of Bond Credit Rating Changes Ford Motor Co. reports the following information from the Risk Factors and the Management Discussion and Analysis sections of its 2015 10-K report. Credit Ratings Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the?U.S. Securities and Exchange Commission: • DBRS Limited (“DBRS”); • Fitch, Inc. (“Fitch”); • Moody’s Investors Service, Inc....
10. More on types of bonds Aa Aa E A legal document that details the rights of bondholders and the issuer is called If the legal document just described includes a sinking fund provision, is the bond considered to have more or less default risk, all else being equal? More default risk Less default risk You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based...
Assume you make the following investments: . A $10,000 investment in a 10-year T-bond that yields 6.00%, and • A $20,000 investment in a 10-year corporate bond with an A rating and a yield of 7.70% Based on this information, and the knowledge that the difference in liquidity risk premiums between the two bonds is 0.30%, what is your estimate of the corporate bond's default risk premium? 1.70% O 1.96% O 1.40% O 2.38%
1) Which of the following assign ratings for corporate bonds in the United States? _______ A) The Securities and Exchange Commission B) The Office of Debt Management C) Private companies such as Moody’s and Fitch D) The issuing companies 2) If you deposit $1,000 in a savings account at an annual rate of 8%, how much will you have in the account at the end of three years? Assume compounding of annual interest and no withdrawals. _______ A) $1,166 B)...