Why should corporate bond pay more than a U.S. T note and less than a preferred...
Why should corporate bond pay more than a U.S. T note and less than a preferred stock?
Homework Answers
A US T note is issued by the Fed, and is guaranteed by the Government of the US. Hence, it is virtually risk free. Therefore it will have a very low yield.
Corporate bonds have some risk of default since they are issued by corporates, and not the Fed. Due to this, they will have higher yields than US T notes
Preferred stocks have higher risk than corporate bonds, but also have more upside and price volatility. Hence, the yields on preferred stock will be higher than yields of corporate bonds
Add Answer to:
Why should corporate bond pay more than a U.S. T note and less
than a preferred...
When a company purchases a bond with face amount $1,000, it may pay more or less...
When a company purchases a bond with face amount $1,000, it may pay more or less than $1,000. Explain why the price can be different from the face amount and what is a premium or discount. By the time the bond matures, the company is paid back $1,000. Explain how the premium (or discount) is amortized. Identify and explain the three types of classifications for investments in debt securities. How unrealized holding gains and losses should be reported for each?...
Big companies have moved overseas to pay less taxes. Top corporate U.S. rates can reach 35%,...
Big companies have moved overseas to pay less taxes. Top corporate U.S. rates can reach 35%, while others are much lower, Ireland's rate is 12.5%. There are many stakeholders concerned about this issue; the U.S. government, corporate executives, the U.S. labor force (employees), corporate investors just to list a few. Is it okay to move overseas to save tax dollars? Research the issue. Select a stakeholder and a position pro or con. Give a detailed defense of your position. In...
Why are government bonds considered more liquid than corporate stocks? Select one: a. Bonds are easier...
Why are government bonds considered more liquid than corporate stocks? Select one: a. Bonds are easier to purchase than corporate stocks b. The bonds market is larger (is worth more money) than the stock market c. Bonds can be sold more quickly than stocks d. Bonds do not fluctuate in price as much as stocks e. Bonds and stocks are actually equally liquid
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...
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 7% and 8.5%, 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, _____. An investor buys a T-bill at a bank discount quote of 5.40 with 90 days to maturity. The investor's actual annual rate of return on this investment is _____. What is the tax exempt equivalent yield...
A BBB-rated corporate bond has a yield to maturity of 6.4%. A U.S. treasury security has a yield to maturity of 4.4%. T...
A BBB-rated corporate bond has a yield to maturity of 6.4%. A U.S. treasury security has a yield to maturity of 4.4%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 4.7% and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the treasury bond? b. What is the price (expressed as a percentage of the face value) of the BBB-rated...
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...
A BBB-rated corporate bond has a yield to maturity of 6.3 % A U.S. treasury security...
A BBB-rated corporate bond has a yield to maturity of 6.3 % A U.S. treasury security has a yield to maturity of 4.3 % These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 5.0 % and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the treasury bond? b. What is the price (expressed as a percentage of the face value)...
A BBB-rated corporate bond has a yield to maturity of 10.8 %. A U.S. treasury security...
A BBB-rated corporate bond has a yield to maturity of 10.8 %. A U.S. treasury security has a yield to maturity of 9.5 %. These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 10.1 % and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the treasury bond? b. What is the price (expressed as a percentage of the face value)...
Is Stock valuation is more difficult than bond valuation? Please explain why this is so. **Must...
Is Stock valuation is more difficult than bond valuation? Please explain why this is so. **Must provide examples.
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...
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...
Most questions answered within 3 hours.
-
4) In a polypeptide, which bond cannot rotate because of its
partial double bond character?
The...
asked 18 minutes ago -
Assume that in the short run L = 1,000 and K = 100. 1. What is...
asked 12 minutes ago -
At a given temperature, 2.06 atm of H2 and 3.7 atm of Br2 are
mixed and...
asked 11 minutes ago -
Sodium reacts with Hydrochloric acid to form sodium chloride and
hydrogen gas. 2Na(s)+ 2 HCl(aq)-> 2...
asked 18 minutes ago -
The following circuits (1 & 2) are combined to form a
series-parallel circuit and resulting circuit...
asked 26 minutes ago -
Feynman's use of path integrals can make some of the transition
from quantum scale to real...
asked 25 minutes ago -
Pb(NO3)2 (aq) + 2 KCl (aq) PbCl2 (s) + 2 KNO3 (aq)
If 54.5mL of 3.82M...
asked 26 minutes ago -
Razeghi (2008) states "In order to succeed at innovation, do not
focus on being creative; rather...
asked 32 minutes ago -
How much heat is required at constant pressure to melt 1 mole of
ice at -25...
asked 35 minutes ago -
Suppose N is a discrete random variable defined by probability
distribution:
n
Pr(N = n)
10...
asked 36 minutes ago -
why are special-interest travelers becoming more important to
tourism service suppliers?
asked 40 minutes ago -
A 50.0-kg child takes a ride on a Ferris wheel that rotates four
times each minute...
asked 1 hour ago