1) Please explain why bond prices are subject to changes in interest rates.
2) Describe the characteristics of a bond and provide an example of a firm or government entity that has recently issued (sold) these securities.
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1) Please explain why bond prices are subject to changes in interest rates. 2) Describe the...
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Recently the Fed has been watched carefully on their decision on interest rates in the US. Discuss and provide an example of interest rate risk to a MNC given an example of what you think the effect will be on an increase or decrease of rates and why? Provide a real example on this topic and your opinion. Also briefly mention the domestic and global effects of rate changes and why?
#1 (a) Explain in words the meaning of the phrase ‘one-year return’ on a bond Calculate the expected one year return on a 10-yr Government coupon bond (5% coupon rate) with a face value of $1000 if interest rates are 3% this year and are expected to fall to 2% next year. (b) Calculate the expected one-year return on the same bond in (a) if interest rates rise to 3.5% instead of falling. (c) What is meant by the phrase...