How low does the market interest rate need to drop to justify refunding with a new bond issue?

Q: What happens to junk bonds in a recession

A: A junk bond refers to that that bond issued by companies that do not have an investment grade credit…

Q: If interest rates in the financial markets increase after a bond is issued, what will happen to the…

A: A bond is an instrument that represents the loan that is made by the investor to the company and…

Q: Interest-rate risk results from:   a. Bond prices being fixed over the life of the bond b. Inflation…

A: Interest rate risk refers to the sensitivity of the bond prices to the interest rate changes. There…

Q: What are your thoughts about buying short term bonds vs. long term bonds in this economic situation?

A: Long-term bonds are more vulnerable to shifts in interest rates. The explanation is the existence of…

Q: How do risk and inflation impact interest rates in the economy?

A: Introduction: The inflation needs to be adjusted in the interest rate of mortgage payments. Due to…

Q: Would there be positive interest rates on bonds in a world with absolutely no risk

A: The fixed income securities which are issued by a firm is known as bond. The fixed income is known…

Q: Why is it an interest rate risk when investing in long-term bonds?

A: Long-term bonds are those bonds that have the longest maturity offering from U.S. Treasury.…

Q: Why does the zero-coupon bond pay no interest?

A:

Q: If the risk associated with bonds issued by a particular issuer decreases, how will this affect the…

A: The relationship between price and yield are inverse. If yield increased, the price of the bond will…

Q: QUESTION 1 a) Under what conditions that a discount bond has a negative nominal interest rate? Is it…

A: Bonds- A bond is a contract between two parties that specifies the principal amount to be paid at…

Q: If interest rates rise, prices of short-term bonds will decline less than long-term bonds. Is this…

A: If interest rates rise, prices of short-term bonds will decline less than long-term bonds because…

Q: if the market rate of interest is lower than the stated rate, bonds will sell at an amount ?

A: Solution: if the market rate of interest is lower than the stated rate, then bond will sell at an…

Q: Why do bond prices go down when interest rates go up? Don’t bond lenders like to receive high…

A: Bond price plays an important role in the trading of the bond. The amount that an investor is ready…

Q: If you buy a callable bond and interest rates decline, will the value of your bond rise by asmuch as…

A: Bond valuation refers to the evaluation of bond value at any point of time, which can be used for…

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: What advantage does hedging using money market rates have over using interest rate futures?

A: However, there are also some drawbacks to consider:Potential Lower Returns: Interest earned on money…

Q: Long-term bonds fluctuate more than short-term bonds as interest rates rise, making them a riskier…

A: The Bond is  type of investment which consists of earning a fixed coupon rate. Bond holders…

Q: Why is it said that zero-coupon bonds lock in the reinvestment rate?

A: The objective of the question is to understand why it is said that zero-coupon bonds lock in the…

Q: Why is there a risk of downgrading on long-term bonds?

A: Long-term bonds are usually for longer terms like 10, 20, 25 or 30 years. due to longer durations,…

Q: Why is the yield of bonds with credit risk higher than that of otherwise identical default-free…

A: The question is based on the concept of calculation of yield to maturity in bond investment , the…

Q: Why are investment-grade bonds more marketable and why are junk bonds issued at all?

A: Introduction: Bond is nothing but debt securities issued by a company or government if they want to…

Q: What would be the value of this bond if it paid interest semiannually? was missed ?

A: Price of bond is the present value of coupon payment and present value of par value of bond taken on…

Q: Are interest rates of junk bonds always higher or lower than investment-grade bonds? Why?

A: A bond is a financial instrument that pays interest to the investor periodically and return of…