Which of the following is NOT TRUE about security/bond valuation? * a. The valuation concept is only applicable to the most common financial securities, the stocks and bonds. b. There are different methods of analysis in valuing bonds which includes getting it present values of future cash flows c. Regardless of their differences in attributes, other financial securities have essentially the same valuation concept. d. None of the choices.

Which of the following is NOT TRUE about security/bond valuation? * a. The valuation concept is only applicable to the most common financial securities, the stocks and bonds. b. There are different methods of analysis in valuing bonds which includes getting it present values of future cash flows c. Regardless of their differences in attributes, other financial securities have essentially the same valuation concept. d. None of the choices.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 4QR

See similar textbooks

Related questions

Q: Which of the following investment strategies involves generating a higher expected rate of return…

A: Through taking more risk the return will also increase too much or decrease to much.

Q: A bond is said to be trading at a premium when the current yield is greater than the YTM and when…

A: Basics:- Current Yield:- It is the expected return from the bonds. Coupon Rate:- It is the actual…

Q: 1)Which of the statement is WRONG? A.The total risk of a security contains risk which is not…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Q: An agent (a financial institution or individual financial investor) that has agreed to deliver a…

A: Answer: An investor or agent who has agreed to deliver a specific asset (but not yet own them) to…

Q: What is compute forward-looking expected return and risk and how does it influence financial…

A: . Introduction: Life is a series of compensation. To get something, you have to give up something.…

Q: 6. Risk-averse people will choose different asset portfolios than people who are not risk averse.…

A: ***Since the student has posted multiple questions, the expert is required to solve only the first…

Q: You have some money to invest, and you don't really care about risk-the return is your sole focus.…

A: ROI or return on investment is calculated as a ratio between net income and investment cost. It is…

Q: Bonds issued by corporations and exposed to default risk are classified as A. corporation bonds B.…

A: The objective of the question is to identify the correct classification of bonds issued by…

Q: The effect of a stock dividend on the balance sheet is to: Select one: A. decrease the number of…

A: When a company pays dividends, it is paying a part of it's earnings to it's shareholders. This…

Q: Select all of the following that are true regarding hedging: A. Hedging is risk mitigation through…

A: (Q)Select all of the following that are true regarding hedging: A. Hedging is risk mitigation…

Q: A bond that is bought at a price below its face value and the face value is repaid at a maturity…

A: Bond: Bonds are the corporate debt units securitized as tradable assets which are issued by…

Q: P Xpe 4: 4 Quantity of Greek Bonds Quantity of Canadian debt In the case of default, what would…

A: Risk premium is considered as the difference between the investment return and the return which is…

Q: a) Explain the reason(s) why bond ratings and interest rate spreads on bonds differ. Which measure…

A: The credit quality or creditworthiness of government-issued bonds or corporate-issued bonds is…

Q: Which of the following represent diversifiable risks? 1. the president of a company suddenly resigns…

Q: Which type of financial intermediary provides individual investors with professional management of…

A: When talking about financial intermediaries, they are the people or organizations that assists…

Question

Which of the following is NOT TRUE about security/bond valuation? *

a. The valuation concept is only applicable to the most common financial securities, the stocks and bonds.
b. There are different methods of analysis in valuing bonds which includes getting it present values of future cash flows
c. Regardless of their differences in attributes, other financial securities have essentially the same valuation concept.
d. None of the choices.

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

a) Explain the reason(s) why bond ratings and interest rate spreads on bonds differ. Which measure is considered by many investors to be a more comprehensive measure of risk? Why?
An agent (a financial institution or individual financial investor) that has agreed to deliver a specific asset (as yet unpossessed) to another party at a future date has:A. taken a long position.B. hedged against risk.C. entered a forward transactionD. taken a short positionE. bought an option.
1)Which of the statement is WRONG? A.The total risk of a security contains risk which is not rewarded. B.Diversification eliminates both idiosyncratic risk and systematic risk. C.There is no clear relationship between the volatility and return of individual stocks. D.The market portfolio contains all shares of all stocks and securities in the market. 2)Which statement below is an appropriate characterization of the asset beta? A. The asset beta is an estimate of the systematic risk a stock would have once leverage is added into the analysis. B.The asset beta is larger than the equity beta for small stocks. C.The asset beta is readily observable for comparable firms. D. The asset beta is an estimate of the systematic risk a stock would have in the absence of leverage
Bonds issued by corporations and exposed to default risk are classified as A. corporation bonds B. default bonds C. risk bonds D. zero risk bonds Only typed solution
.
A bond that is bought at a price below its face value and the face value is repaid at a maturity date is called a: Select one: a. simple loan b. fixed-payment loan. c. Coupon bond. d. Discount bond
Identify the following numbers whether it is a "BOND" or "STOCK"
please answer in details within 30 minute as to why the option is right and why other options are wrong.
6. Risk-averse people will choose different asset portfolios than people who are not risk averse. Over a long period of time, we would expect thatA.every risk-averse person will earn a higher rate of return than every non-risk averse person.B.every risk-averse person will earn a lower rate of return than every non-risk averse person.C.the average risk-averse person will earn a higher rate of return than the average non-risk averse person.D.the average risk-averse person will earn a lower rate of return than the average non-risk averse person. 7.The real exchange rate equals the relative A.price of domestic and foreign currency.B.price of domestic and foreign goods.C.rate of domestic and foreign interest. D.None of the above is correct. 8.According to the theory of liquidity preference, an increase in the price level causes theA.interest rate and investment to rise.B.interest rate and investment to fall.C.interest rate to rise and investment to fall.D.interest rate to fall and…
Please expalin the right answer A 10-year, annual payment corporate coupon bond has an expected return of 11 percent and a required return of 10 percent. The bond's market price is: A) greater than its present value. B) less than par. C) less than its expected rate or return. D) less than its present value. E) $1,000.00.
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
PLS HELP ASAP