Which of the following lowers the required interest rate that firms have to pay on their bonds?  Which of the following raise the interest that firms have to pay? Private placements Public offerings Sinking fund provisions Protective Covenants Call provisions Collateral An active secondary market A low credit rating

Q: A junk bond rating is BAA BBB and lower BB none of the above

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: A bond's price would likely fall as a result of any of the following except contraction of the…

A: The correct option isD) heavy Federal Reserve buying on the open marketExplanation :-Therefore,…

Q: Which of the following statements is incorrect? Group of answer choices Unsystematic risk can be…

A: Introduction: Unsystematic risk is the risk that is specific to an industry and this risk is…

Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…

A: Corporate Bond: Bonds issued by companies, whether they be public or private, are considered to be…

Q: Should a firm use debt instruments as a financing option, what are its effects on the firm’s…

A: Debt financing is considered as adding debt instruments or funds to the capital structure. Company…

Q: Which bond usually will have a higher liquidity premium:one issued by a large company or one issued…

A: The liquidity premium may be a premium asked by speculators when the reasonable market value of any…

Q: It is often argued that debt becomes a more attractive mode of financing than equity as interest…

A: Debt refers to funds that are raised by an entity by generating outside liability for which entity…

Q: interest rate risk differs between mortgage companies and other financial institutions

A: The mortgage company is a financial firm that gives out its own loans. They use their own funds or…

Q: Loans are collateralized to: a increase returns b increase liquidity c reduce concentration risk d…

A: Note: Since you have posted multiple questions, we will solve the first question for you as per…

Q: Which of the following is not a main core function of the financial system? a. Provide a payments…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: In which market environment does the issuance of a callable bond make more sense from a corporate…

A: A bond is a debt security that is sold by a business entity to borrow long-term funds. Generally,…

Q: When a firm gets riskier what will happen to its bonds Multiple Choice   the stated interest rate…

A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…

Q: (please all options information and correct answer) Decreases in the following factors that will…

A: A bond refers to a fixed-income investment instrument issued by governments, municipalities, or…

Q: Which of the following is a disadvantage of using bonds?     a. Bondholders do not participate in…

A: Introduction : In simple words, there are several sources from which a company can raise capital to…

Q: A problem of financing with debt ( bonds) is that Group of answer choices the price of new bond…

A: The question is asking about the potential problems or challenges that can arise when a company…

Q: When market volatility increases, does that increase, decrease, or have no effect on the credit…

A: Market Volatility means deviation of market for a specific period.  The difference between the yield…

Q: Does a steady low-volatility environment, increase, decrease, or have no effect on the credit spread…

A: answer are as follows.

Q: Choose True or False: [T / F] Through credit derivatives, a firm can separate the credit risk…

A: Credit derivates is that financial contract that allows creditors to transfer to third party in case…

Q: Which of the following will increase a firm's aftertax cost of debt financing? Select one: a.…

A: Cost of debt is usually computed on an after tax basis. This is because the interest expenses are…

Q: Is it beneficial for bondholders when the yield to maturity grows or decreases? Why?

A: Introduction: When the yield to maturity of a bond rises, the bond's price declines as a result of…

Q: If a company’s newest product flops in the marketplace, what effect is thatlikely to have on the…

A: Bond is debt-instrument that is used by entities to raise debt funds from public-at-large. Bonds pay…

Q: he following statements is TRUE? emand for a bond declines when it becomes less liquid, decreasing…

A: A liquid asset is one that can be converted to cash quickly and easily. Liquid assets include cash,…

Q: issurance of convertible bonds to be an attractive form of financing

A: Financing:- Financing means to provide money to someone for a particular rate of Interest. This is a…

Q: Why would a company typically choose to source external financing by issuing bonds rather than…

A: Bonds are debt instruments that are used by institutions to raise capital. The face value and the…

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: If a firm increases its financial risk by selling a large bond issue that increases its financial…

A: Financial risk is an intrinsic component of investing and applies to organisations, governments,…

Q: Beacuase the conversion feature in a convertible bond is valuable to  bondholders, convertible bond…

A: No, the company cannot lower the cost of borrowing by selling the convertible debt.

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: ‘Debt finance is less expensive than equity finance’ Explain

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

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…

Q: How would a financial institution with a large bond portfolio be affected by falling interest rates?…

A: Bonds are fixed income earning instruments where the investor lends money to the company in exchange…

Q: if we see an increase in default rates, what may that mean for the junk bond market and for…

A: Junk bonds are those bonds that carry a very high risk of default.  These bonds are issued by…

Q: Why might a firm prefer to finance its investments with bonds rather than stocks? Alternatively, why…

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

Q: Investors invest in Fixed Income securities (i.e., bonds) for the passive income that comes from…

A: In this question, we are required to determine whether the given statement is true or false.

Q: Which of the following statements is not correct? Select one: а. The duration of a consol bond is…

A: a) Duration of the Consol Bond /Perpetuity has no maturity =1+yy years where ,y= Coupon rate of the…

Q: Why are long-term corporate bonds higher risk than short-term corporate bonds? Provide an example

A: Longer term bonds have higher risks than short term bonds due to their duration and time period.…

Q: 2. The Trade-OfT Model A. "The trade-off model of debt financing implies that an increase in the…

A: As you have asked multiple questions, we will solve the first question as per the policy of…

Q: When estimating cost of debt, the firm should not simply use current short-term rates because these…

A: When estimating the cost of debt, firms typically should not simply use current short-term rates…

Q: What is meant by coupon stripping in the Treasury market?

A: Coupon stripping is the separation of an instant bond's periodic interest bills from its foremost…

Q: Explain why corporate bonds’ default and liquidity premiums are likely to increasewith their…

A: solution: corporate bonds yield higher more than treasury bills due to their additional default and…

Q: In considering the market-based approach to measuring credit risk, choose all statements that are…

A: Credit risk is the risk of a loss coming from a borrower's failure to repay a loan or meet…

Q: Under which of the following situation, would a firm most likely to  call its outstanding callable…

A: Callable bonds are a type of bond that can be redeemed or called by the issuer before maturity.…