Bond ratings are positively related to Select one: a. type of business. b. earnings instability. C. size. d. leverage

Q: Bond ratings primarily reflect which of the following? Reinvestment risk, Default risk , Interest…

A: Bond ratings are an important aspect of the bond. It shows the credibility level of the bond issuer.

Q: Among the factors considered in the quantitative models of default risk: a. Business cycle b.…

A: Business cycle is defined as an economic cycle that is linked with fluctuation of the GDP in its…

Q: Bonds and stocks should be categorized as:  a. Personal Assets  b. Financial Assets  c. Real…

A: Both bonds and stocks can be purchased through brokerage firms or investment advisors, and both…

Q: which of the below has a negative correlation with the return on bonds ? a. Taxability b. Default…

A: Bonds is fixed income instrument that represent that loan provide by investor to borrower. Following…

Q: What is the cost of equity based on the own-bondyield-plus-judgmental-risk-premium method?

A: Answer: Bond-yield-plus-judgemental-risk-premium method involves adding a judgemental risk premium…

Q: The relationship between bond prices and the interest rate bonds pay: Seleccione una: a. is Positive…

A: Companies issue bonds in order to meet their requirements of funds. Companies pay a fixed rate of…

Q: With bond valuation, there are many terms to understand specific to bonds.   Take one of these terms…

A: Bond valuation is the process of determining the fair value or market price of a bond. Bond…

Q: What ratios are likely to be of greatest interest to the banker or trade creditor? To the…

A: The objective of the question is to identify the financial ratios that are of greatest interest to a…

Q: 1. Differentiate stocks from bonds; and stockholders from bondholders.

A: Since you have posted a question with multiple questions, we will solve the first one for you. If…

Q: What is the main reason for the yield differences between treasury bond yield and corporate bond…

A: A treasury bond is issued by the government and is backed by the treasury whereas a corporate bond…

Q: What does the market value of debt and equity refer to? O A. The values at which debt and equity are…

A: Intrinsic value of an asset is the price which is determined based on the actual financial…

Q: Duration is important in understanding a fixed income portfolio because A. it is used in the capital…

A: When the porfolio is designed by incorporating some of the securities which has fixed interest…

Q: Describe each of the following methods for estimating the cost of equity: (a) the CAPM, (b) DCF,and…

A: a) CAPM The full form of CAPM is the Capital asset pricing model. It is used in determining the…

Q: FINANCIAL RISK MANAGEMENT  1. Duration is a measure of interest rates risk. (True/ False) 2. Bond…

A: The answers and explanations are provided below:

Q: Debt to Total Assets Ratio can be improved by: A. Borrowing More, B. Issue of Debentures, C. Issue…

A: Debt to total assets ratio measures the proportion of total assets finance by creditors. it can be…

Q: Critically compare the riskiness of bonds and stocks from the valuation model perspective

A: The main fundamental difference between shares and bonds as investment options is the risk involved…

Q: Bond ratings measure a company's: Exchange rate risk.   Equity risk.   Interest rate risk.…

A: A bond rating is an assessment of the creditworthiness of a bond issuer, such as a corporation or…

Q: w much is the cost of equity using the capital asset pricing model? b. How much is the cost of…

A: In this we have to determine the cost of equity using capital asset pricing model.

Q: What is a bond spread and how is it related tothe default risk premium? How are bond ratingsrelated…

A: Bond spread: It is the difference between the yields of two bonds.

Q: f the curvature in the relationship between bond prices and bond yields.

A: Macaulay duration of bond is weighted average no. of times fixed cash flows associated with bond…

Q: Marketable securities are a. long term in nature b. are examples of bonds c. traded in the money…

A: Marketable securities are easily and affordably convertible into cash. They are highly liquid…

Q: Can issue characteristics (such as coupon and call features) affect the yield and price behavior of…

A: Bonds are debt instruments which are issued to raise fund for any project or expansion. These are…

Q: What does the book value of debt and equity refer to? O A. The par values of common stock and the…

A: The par value of stock is the price which is usually set at when the stock is issued. It is present…

Q: Based upon risk, which of the following financial assets is likely to have the highest required rate…

A: Option A: Corporate Bond:  A corporate bond is less risky as return on investment is guaranteed.…

Q: Describe the likely effect on the yield to maturity of a bond resulting from:a. An increase in the…

A: Yield to maturity (YTM) implies the rate of return on the bond that is hold till the maturity from…

Q: What is the relationship between bond price and yield. Explain with an example and graphical…

A: A bond is a kind of debt financial instrument that is being issued by corporations and the…

Q: Default risk on bonds can be evaluated by using: A. financial analysis B. bond ratings C. estimates…

A: Default risk is the risk that a borrower won’t be able to make required debt payments.

Q: Identify which refers to the relationship of interest and time of maturity of securities.

A: interest refers to the return that an investor gets for investing his money in the security or…

Q: Which of the following fixed income securities has the highest level of risk? Which one has the…

A: Fixed-income securities are financial instruments that promise a steady stream of income to…

Q: REQUIREMENTS: 1.  How much is the cost of equity using the capital asset pricing model? 2. How…

A: Cost of Equity represents the expected return by the shareholders of the company.It can be…

Q: The rate of interest actually earned by bondholders is called the Select one: O a. effective rate. O…

A: Solution Concept If the coupon rate of bond is greater than the market rate of interest , bond is…