1. Why do callable bonds have negative convexity (concavity)?

Q: How the bond convexity affects the accuracy of the firs order approximation method? What are the…

A: Convexity is a risk-management technique that may be used to assess and manage a portfolio's…

Q: What is meant by a dilutive security?

A: Dilutive security is a type of investment security that helps the company increase its equity…

Q: Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

A: Some risk can be hedged using derivatives

Q: Which theory of the term structure proposes that bonds of different maturities are not substitutes…

A: Holding money in the form of cash has the benefits of providing liquidity and meeting transactional…

Q: Explain the bond theorems discussed in class witNrespect to time and coupon.

A: bond: it is a debt instrument issued by the firm to raise capital.

Q: Why consider bonds?

A: A bond can be described as the security or asset which provides secure income to the investor…

Q: Why do noninvestment-grade bonds have much higher direct costs than investment-grade issues?

A: Bond: Bond is a kind of debt instrument typically issued by corporations, government organizations…

Q: What is a bond spread?

A: Answer: The term ‘bond spreads’ or yield spread is the disparity in yield between debt instruments…

Q: What are the two best arguments against debt reduction (i.e., the cons)?

A: The term "debt reduction" is also known as debt settlement. As the name suggests, it…

Q: Bonds are least likely to be called if they are selling at a substantial premium. they are selling…

A: Option 2nd is correct.

Q: Please answer both!!!!!!!!!! 3. What is the purpose of technical analysis? Explain how and why it is…

A: Solution-Note-Since you have asked multiple question, we will solve the first question for you. If…

Q: What are some common challenges or complexities associated with bond amortization?

A: Bond amortization refers to the systematic allocation of the premium or discount on a bond over its…

Q: Why is the time Submittal bonds important?

A: A bid bond is a building bond form that covers the holder or developer during a contract. It is a…

Q: What is the difference between D uration and Convexity of a bond?

A: Duration measures the bond's sensitivity to interest rate changes. Convexity relates to the…

Q: What does the financial breakeven point shows?

A: A breakeven point is a situation of no loss no profit. The breakeven point is generally calculated…

Q: What is outstanding bond?

A: Bond: It can be defined as the loan given to a business or any other organization by the investor…

Q: What cause shifts for supply of bonds? Explain by the help of graphs

A: The bond supply curve depicts the relationship between the quantity of bonds and their prices. All…

Q: What is liquidity (security)?

A: Introduction: Liquidity is associated to rapid access to cash. Persons hold assets or security, and…

Q: What are the implications of interest rate parity theorem.

A: Interest rate Parity:- The interest rate parity (IRP) theory states that the difference between the…

Q: What is duration gap model? Explain the concept of duration. How duration measure can be used to…

A: Duration gap measures the mismatch between the duration of assets and liabilities held by a…

Q: Bond prices and bond yields are negatively related. Explain why

A: Bonds are debt instruments issued by companies. The issuing company pays periodic coupons/interests…

Q: A security that is neither debt nor equity but derives its value from an underlying asset that is…

A: Convertible securities are securities that can be converted into fixed number of shares after a…

Q: Explain title Mechanics’ Liens?

A: Lien is a right of posession of an asset; in case, debts are not discharged by the owner of the…

Q: What cause shifts for demand of bonds? Explain by the help of graphs.

A: The theory of portfolio choice summarizes all the determinants that tells how much of an asset…

Q: What is a “convertible security”?

A: Securities: Securities refers to a negotiable financial instrument that holds some type of monetary…

Q: Counterparty credit risk is a function of the probability of default, exposure at default, and loss…

A: A counterparty may default its payments and the risk a company face due to this default is known as…

Q: risk with practical examples

A: Default risk is the risk that a lender takes on in the chance that a borrower will be unable to make…

Q: What 2 variables will you be asked to solve for with bond problems?     PV and FV     PV and PMT…

A: A bond is a debt instrument issued by a government or a company (issuer) to raise capital. Investors…

Q: Why is bond demand curve downward slopping? Why is bond supply curve upward slopping?.

A: Introduction :- Ans-1 The downward sloping of the bond demand curve is due to the fact that when the…