Which of the following statements is true?   A.   Yield spread is reflected in the size of the bid-ask spreads.   B.   Issuer credit ratings, or corporate family ratings, reflect a debt issuer’s overall creditworthiness and typically apply to a firm’s senior secured debt.   C.   An investor with an investment horizon of 6 years buys a bond with a modified duration of 6.0. if the yield-to-maturity (YTM) is 0.0214, this investment will have no duration gap.   D.   Compared to long-term duration bonds, short-term duration bonds have narrow bid-ask spreads.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

Which of the following statements is true?

 

A.

 

Yield spread is reflected in the size of the bid-ask spreads.

 

B.

 

Issuer credit ratings, or corporate family ratings, reflect a debt issuer’s overall creditworthiness and typically apply to a firm’s senior secured debt.

 

C.

 

An investor with an investment horizon of 6 years buys a bond with a modified duration of 6.0. if the yield-to-maturity (YTM) is 0.0214, this investment will have no duration gap.

 

D.

 

Compared to long-term duration bonds, short-term duration bonds have narrow bid-ask spreads.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Rate Of Return
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education