as interest rates change does rhe nominal yield of the new issues match the rate? conversely does the current yield on outstanding binds change according to these new rates (premium or discount)?

Q: If there is inflation how does this affect LIFO reserves? Does it increase or decrease it?

A: LIFO Last-in-first out is a method used to issue material. It is a method of pricing the issues of…

Q: Assume that the risk-free rate increases, but the market risk premium remains constant. What impact…

A: Risk free rate is free from the risk. Every rate of return given is depends on the risk free rate.

Q: What is the two-step process can which performs deflation and discounting in market interest rate?

A: The two-step process which performs deflation and discounting is that it makes the cash flows…

Q: The present value of a lump sum future amount: O A. increases as the interest rate decreases. O B.…

A: The present value is defined as the discounted amount of the expected future value. The current…

Q: Which one of the below most likely respresents the periodic receipts of interest? O the coupon rate.…

A: Periodic payments means fixed amount paid regularly to the investor. Example interest amount on…

Q: Is default risk premium likely to be pro-cyclical (i.e., increasing during economic expansion) or…

A: The difference between the company's actual interest rate and risk free rate within the industry is…

Q: An analyst evaluating securities has obtained the following information. The real rate of interest…

A: We can determine the yield on a T bond using the formula below:The yield of a corporate bond can be…

Q: According to the ,long-term interest rates are a function of expected short-term interest rates…

A: Essentially, the term structure of interest rates is the correlation between asset yields or…

Q: In part (b), why was the coupon payment added to the difference between the current and inital…

A: A coupon on a bond refers to the periodic interest payments that the bond issuer makes to the…

Q: Goodyear, a U.S. firm, sells tires to Airbus UK, and will receive payment of £1,000,000 in one year.…

A: With globalisation and increasing demand of services and products, firms operates businesses…

Q: If interest rates increase because of a previously unanticipated inflation rate risk?…

A: Answer -  If interest rates increase because of a previously unanticipated inflation rate risk as a…

Q: The coupon interest rate: O Is larger than the stated interest rate Is the same as the market…

A: Bonds are the obligation on an entity. These are securities which are issued by the entity in order…

Q: Which one of the theories states that “the rate of interest is set in the market for money…

A: Interest rates are fluctuated based on different parameters of the economy. There are different…

Q: What is the Relationship between Changes in Interest Rates, Investor Returns, and “Going-In”Cap…

A: The question is based on the concept of relation between change in interest rate and its impact on…

Q: Please expalin why this statement is (True).  The traditional liquidity premium theory states that…

A: Liquidity Premium Liquidity premiums are additional compensation added to investors who invest in…

Q: 1. A "normal" term structure of interest rates would depict A) Long term rates higher than short…

A: Meaning - "Normal" term structure of Interest Rates: It is the most common shape of the yield curve…

Q: The following figures illustrate which theory concerning interest rates? Yield to Maturity Time to…

A: The Liquidity premium theory states that long term interest rates include a premium for holding long…

Q: If the yield curve is downward sloping, what would the expectations theory suggest about expected…

A: Yield Curve: It represents a plotting of interest rates of bonds with equal credit & different…

Q: Typically, short-term interest rates: А. are more volatile than long-term interest rates В. are less…

A: Short-term interest rates are usually averages of daily rates, calculated as a percentage. The…

Q: Why might a company become involved in an interestrate swap contract to receive fixed interest…

A: Interest rate swap contract: It is an agreement between the two parties who are in contract, where…

Q: simple payback period will be less than the payback period considering compounded interest rate (for…

A: 1. Simple Payback Period: The simple payback period is the time it takes to recover the initial…