Which one of the following factors does not affect bond yields? Multiple choice question. lack of liquidity capital gains yield expected future inflation tax status
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Which one of the following factors does not affect bond yields?
lack of liquidity
expected future inflation
tax status
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- Which of the following would cause lower bond yields? greater maturity risk or more liquidity?According to the ,long-term interest rates are a function of expected short-term interest rates Maturity theory Expectations theory Market segmentation theory Preferred habitat theoryWhat is the relationship between forward rates and the market’s expectation of future short rates? Explain in the context of both the expectations hypothesis and the liquidity preference theory of the term structure of interest rates.
- The yield curve varies over time based the relative riskiness of buying a single long-term bond versus purchasing multiple short-term bonds. This explanation of the yield curve is most consistent with A.the Fisher Effect theoryB.the market segmentation theoryC.the unbiased expectations theoryD.the liquidity preference theoryWhich of the following is not a determinant of interest rates? a) The Required Rate of Return b) The Liquidity Risk Premium c) The Re-investment Risk Premium d) The Maturity Risk Premium e) None of the aboveHelp
- When estimating cost of debt, the firm should not simply use current short-term rates because these rates do not reflect expectations regarding Group of answer choices long-term inflation expansionary monetary policy contractionary monetary policy short-term inflationAssume that the risk-free rate increases, but the market risk premium remains constant. What impact would this have on the cost of debt? What impact would it have on the cost of equity? How should the capital structure weights are used to calculate the WACC be determined?An upward-sloping yield curve may be an indication that interest rates are expected to increase. may incorporate a liquidity premium. may reflect the confounding of the liquidity premium with interest rate- expectations. All of the opțions are correct. None of the options are correct.
- Which one of the following statements is false concerning the term structure of interest rates? Group of answer choices The real rate of return has minimal, if any, effect on the slope of the term structure of interest rates. The interest rate risk premium increases as the time to maturity increases. Expectations of lower inflation rates in the future tend to lower the slope of the term structure of interest rates. The term structure of interest rates includes both an inflation premium and an interest rate risk premium. As the maturity increases the term structure of interest rates is always an upward sloping curve.3. Bond prices and yields (S3.1) Construct some simple examples to illustrate your answers to the following:Which asset below is generally the most suitable benchmark measure of the risk-free return? Treasury bills Small stocks Long-term government bonds Non-investment grade bonds Common stocks
