The default-risk premium: a) should vary directly with the bond's yield and inversely with its price....
The default-risk premium:
a) should vary directly with the bond's yield and inversely with its price.
b) is less than 0 (zero) for a U.S. Treasury bond.
c) should be lower for a highly speculative bond than for an investment-grade bond.
d) should vary directly with the bond's yield and the bond's price.
Homework Answers
The default-risk premium:
A). Should vary directly with the bond's yield and inversely with its price
Add Answer to:
The default-risk premium:
a) should vary directly with the bond's yield and inversely with
its price....
Select one A the real rate, a default risk premium and expected inflation question B. the...
Select one A the real rate, a default risk premium and expected inflation question B. the real rate, expected inflation and a default risk premium C. expected inflation, a default risk premium and a maturity premium D. the real rate, expected inflation, and a maturity premium. 25 The is the face value of the bond. Select one 0 out of A coupon X B. maturity date question C. coupon tate D. par value 26 Vitmix Industries Inc. is issuing a...
Which of the following statements is CORRECT? A bond's current yield must always be either equal...
Which of the following statements is CORRECT? A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate. If a bond sells at par, then its current yield will be less than its yield to maturity. If a bond sells for less than par, then its yield to maturity is less than its coupon rate. A discount bond's price declines each year until it matures, when its...
If a bond is selling at a premium (i.e., at a price more than its face...
If a bond is selling at a premium (i.e., at a price more than its face value), which of the following is true? Interest rates must have gone up since the bond was issued. The coupon rate is higher than the yield to maturity. The bond must be a zero-coupon bond. The coupon rate is lower than the yield to maturity. The bond must have been issued by the U.S. Treasury.
Just the answer please 13. Bonds with relatively low risk of default are called securities and...
Just the answer please
13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade bonds....
c. Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP), and maturity...
c. Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP), and maturity risk premium (MRP). Which of these premiums is included in determining the interest rate on (1) short-term U.S. Treasury securities, (2) long-term U.S. Treasury securities, (3) short-term corporate securities, and (4) long-term corporate securities? Explain how the premiums would vary over time and among the different securities listed.
2. Which of the following statements is CORRECT? a. If the maturity risk premium (MRP) is...
2. Which of the following statements is CORRECT? a. If the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping. b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. e. If inflation is expected to decrease in the future and the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be downward sloping d. If the expectations theory holds,...
3. Corporate bond yield - Treasury bond yield = C6 A. Municipal bond yield B. Hypothetical...
3. Corporate bond yield - Treasury bond yield = C6 A. Municipal bond yield B. Hypothetical yield curve C. Default risk premium D. Default risk premium + liquidity premium E. Municipal bond yield - default risk premium 4. Which of the following statements is true about municipal bonds? C7 A. Municipal bondholders are safer than corporate bonds B. Municipal bonds can be issued by federal, state and local governments C. Municipal bonds have a comparable coupon rate to corporate bond...
1. 1 in Nation is expected to be relatively low, then Interest rates will tend to...
1. 1 in Nation is expected to be relatively low, then Interest rates will tend to be relatively high, other things held constant 2. True b. False 2. Which of the following statements is CORRECT? 2. If the maturity risk premium (MRP) is greater than rero, the Treasury bond yield curve must be upward sloping b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. c. If inflation is expected to decrease in...
If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk pr
If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?a. 1.00%b. 1.10%c. 1.20%d. 1.30%e. 1.40%
1. The term structure of interest rates refers to the relationship between _____. a bond's time to maturity and its coupon rate a bond's age since issue and its coupon rate a bond's age si...
1. The term structure of interest rates refers to the relationship between _____. a bond's time to maturity and its coupon rate a bond's age since issue and its coupon rate a bond's age since issue and its yield a bond's time to maturity and its yield. 2. The yield on 12-month treasury bills is 1.4% and the yield on 2-year treasury STRIPS is 2%. a. What is the implied 1-year forward rate one year from now? 3. The term...
Select one A the real rate, a default risk premium and expected inflation question B. the real rate, expected inflation and a default risk premium C. expected inflation, a default risk premium and a maturity premium D. the real rate, expected inflation, and a maturity premium. 25 The is the face value of the bond. Select one 0 out of A coupon X B. maturity date question C. coupon tate D. par value 26 Vitmix Industries Inc. is issuing a...
Just the answer please
13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade bonds....
c. Define the terms inflation premium (IP), default risk premium (DRP), liquidity premium (LP), and maturity risk premium (MRP). Which of these premiums is included in determining the interest rate on (1) short-term U.S. Treasury securities, (2) long-term U.S. Treasury securities, (3) short-term corporate securities, and (4) long-term corporate securities? Explain how the premiums would vary over time and among the different securities listed.
2. Which of the following statements is CORRECT? a. If the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping. b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. e. If inflation is expected to decrease in the future and the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be downward sloping d. If the expectations theory holds,...
3. Corporate bond yield - Treasury bond yield = C6 A. Municipal bond yield B. Hypothetical yield curve C. Default risk premium D. Default risk premium + liquidity premium E. Municipal bond yield - default risk premium 4. Which of the following statements is true about municipal bonds? C7 A. Municipal bondholders are safer than corporate bonds B. Municipal bonds can be issued by federal, state and local governments C. Municipal bonds have a comparable coupon rate to corporate bond...
1. 1 in Nation is expected to be relatively low, then Interest rates will tend to be relatively high, other things held constant 2. True b. False 2. Which of the following statements is CORRECT? 2. If the maturity risk premium (MRP) is greater than rero, the Treasury bond yield curve must be upward sloping b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. c. If inflation is expected to decrease in...
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