ii. If interest rates are on a rising trend, which would you rather be holding, long-term
bonds or short-term bonds? Why? Which type of bonds have the greater interest-
rate risk?
iii. One of your best friends, an expert in finance, has just given you the following advice:
“Long-term bonds are a great investment because their interest rates are over 20-25
%.” How do you evaluate this statement? Is your friend necessarily correct?
iv. What is the difference between bonds with call- provisions and sinking-fund
provisions? Which one is riskier from investors (holders) point of view?
v. Suppose International arbitration court imposes a fine of $ 2 billions on a country,
what are the likely effects of this event on the bond yields and
country.
vi. If required
overvalued or undervalued? Will you buy this asset or sell it?
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