Which of the following should be your main concern if you hold a 100-year bond issued by Disney which now has 63 years more to go before maturity? A Refinancing risk B Interest rate risk C Credit risk D Environmental risk

Which of the following should be your main concern if you hold a 100-year bond issued by Disney which now has 63 years more to go before maturity? A Refinancing risk B Interest rate risk C Credit risk D Environmental risk

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which of the following should be your main concern if you hold a 100-year bond issued by Disney which now has 63 years more to go before maturity?

A
Refinancing risk
B
Interest rate risk
C
Credit risk
D
Environmental risk

Expert Solution

Step 1

Bond: It implies to a written contractual agreement that takes place between borrower and lender and it requires the borrower to pay a specified sum of money at each regular interval up to a certain time period, known as maturity period. It becomes an obligation on part of the borrower.

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