Briefly explain the investment assumptions that are used to calculate the current yield and yield to maturity

Q: how to calculate the average monthly return for a portfolio

A: The return of the portfolio is the weighted average return of the individual securities held in the…

Q: How can we find Yield to maturity?

A: Yield to maturity (YTM) is the foreseen absolute profit for a bond if the bond holds until due or…

Q: Discuss how prospect theory explains the equity premium puzzle?

A: The equity premium puzzle means outperformance of stocks over Treasury bills,  which is based on…

Q: 5. What is a multi-factor model technique and why is it used in fixed-income portfolio management?

A: Fixed income portfolio comprises of the securities that generate regular income to the investors at…

Q: Which option is an efficiency ratio? Select an answer: total asset turnover ratio

A: Ratio analysis is one of the technique used in management accounting. Several type of calculations…

Q: 5. How the time based term effects interest rates and its yield curve?

A: Yield curve:- A yield curve is a graph that shows how the yields (interest rates) of bonds with…

Q: 3. Future value The principal of the time value of money is probably the single most important…

A: Time value of money: This concept tells us that a sum of money received today is  worth more than a…

Q: What is maturity matching approach (for short-term financing)?

A: This approach states that the maturity of company’s assets and liabilities should be coordinated to…

Q: How do maturity risk premiums affect the yield curve?

A: A premium, which a borrower pays to the lender in the form of compensation of interest rate…

Q: effective annual yield (or bond annual yield)

A: The effective yield is the return on a bond that has its interest payments (or coupons) reinvested…

Q: What is Long-Term Equity AnticiPation Security (LEAPS)?

A: Long-term equity anticipation securities (LEAPS) It's a contract for trading on open market options…

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: What does the annual effective yield represent?

A: Yield refers to the rate of return that is received by the owner of the security who has invested in…

Q: Is the risk-free rate the Treasury yield?

A: The risk-free rate refers to the rate of return on an investment that is having zero risk of loss.…

Q: How to analysis the forex market

A: Introduction: Forex market-It is a place where banks, investment management firms, hedge funds,…

Q: e ‘Yield Curve’, also known as the ‘Term Structure of Interest Rates’, can take several different…

A: In determining the interest rate in near future or over long period yield curve is very important.…

Q: The formula of which of the following considers the percentage change in price? a. Total expected…

A: Percentage change in price Percentage change in price involves two prices of two different periods.…

Q: Which of the following is the best representation of a firm’s effective cost of debt financing?…

A: When a company raises funds by issuing debt, it incurs a cost of debt financing. This cost…

Q: 2. What are the two types of fixed-income portfolio management strategies and why is each used?

A: The portfolio composed of securities resulting in the regular cash flows which will ultimately helps…

Q: Consider the following graph of the efficient frontier.     Which of the following portfolios is…

A: Attainable portfolios lie inside and on the efficient frontier. Attainable portfolios are feasible…

Q: Manipulating CAPM Use the basic epuation for the capital asset model (CAPM) to work each of the…

A: CAPM Formula: E(r) = Rf+ b(Rm - Rf) Where Rf is the risk free rate b is the beta Rm is the market…

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: How does the inflation premium shape the yield curve?

A: The inflation premium is one of the components that shape the yield curve. It reflects the…

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: List two examples of different benchmarks that are used to determine the coupon rate of a…

A: Different benchmarks:- Benchmarking is a competitive advantage that enables businesses to adapt,…

Q: 31. An inverted yield curve: a. exists when short-term interest rates are higher than long-term…

A: The yield curve is a graphical representation of yields vs its maturities.

Q: Describe and link the following terms: a) Normal yield curve b) Term structure of interest rates c)…

A: Yield curve estimates the future rate of interest of bonds. Future rate of interest of bonds is the…

Q: Market risks are: B. Interest rate risk, foreign exchange risk, portfolio concentration, commodity…

A: Market risk are associated with ups and down of market. It referes to risk of loss aries from the…

Q: ine the difference between Passive and Active Strategies for a fixed

A: The portfolios are managed by the experienced fund managers and depending objective and mission of…

Q: Define each of the following terms:b. Par value; maturity date; coupon payment; coupon interest rate

A: Bond is the debt instrument issued by the borrowers to raise funds from various investors. Generally…

Q: Define yield to maturity (YTM)

A: Bond is a financial instrument. Issuer issues bond to raise the fund and payback the amount at the…

Q: 4. What are the various types of risk intrinsic to fixed-income portfolios?

A: Fixed income portfolios include investments that provide periodic interest at a fixed rate. Fixed…

Q: 1. What is the most accurate measure of interest rates? a) Current Yield b) Nominal Interest Rate c)…

A: Interest rates refer to the cost of borrowing money or the return on an investment. They can vary…

Q: Which of the following factors comprise the CAPM? I. dividend yield II. risk-free rate of return…

A: The capital asset pricing model (CAPM) describes the relationship between the expected return and…

Q: What are the differences between stocks and bonds in terms of predicted future payments? Which sort…

A: Introduction: A bond is a financial security issued by a firm or government to borrow long-term cash…

Q: Using the IRR func1ion in Excel, can we calculate the yield to maturity?

A: Yield to Maturity (YTM) is the rate of return that an investor will earn if the security is held…

Q: hort Term Trading Strategy for market portfolio

A: Trading for market portfolios can be short term trading strategy and long term trading strategy. The…

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.