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

Q: Give two specific examples of "wealth," which may lead to the increase in the demand for bonds,…

A: Increase in the demand for bonds: Increased bond supply will result in a rightward shift in the bond…

Q: Why might a company choose to raise money through bonds, rather than take out a note payable or…

A: Bonds are the long-term liability of the company where the company raises the money in lieu of…

Q: What are the main advantages and disadvantages of            investing in bonds?

A: Bonds are debt instruments issued by an entity. The issuing entity can either be a corporate entity…

Q: Are US Treasury bonds truly risk free?

A: United state treasury bonds are reflective of all such treasury securities which are protected…

Q: What are your thoughts about buying short term bonds vs. long term bonds in this economic situation?

A: Long-term bonds are more vulnerable to shifts in interest rates. The explanation is the existence of…

Q: What are the more recently issued (and more frequently traded) bonds called? Why do investors favor…

A: The more recently issued (and more frequently traded) bonds are called Treasury Bonds which are…

Q: Why is yield to maturity more important than coupon rate when it comes to bonds?

A: The Yield to maturity refers to the return that one can expect if a thing is kept till its maturity.…

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: Is having a call feature advantageous for a bond issuer? Why do you think that is?

A: A call provision seems to be a clause in a bond or even other fixed-income instruments agreement…

Q: Explain why long-term bonds are subject to greater interest rate risk than short-term bonds with…

A: The objective of this question is to understand why long-term bonds are more susceptible to interest…

Q: What is the A  (single-A rated corporate bond)  Default Risk Premium (rdp)?

A: Treasury bill rate 5 year bond: Treasury rate for 5 year A bond is 5.90%.

Q: Who issues Bonds? Why should you own Bonds?  What are the risks of owning Bonds?

A: Bonds are the debt instrument issued to the bondholders of the organisation.

Q: A corporate bond's return becomes less uncertain as default risk increases.   True or False.…

A: A bond is a financial instrument that represents a loan made by an investor to a borrower (usually a…

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: Explain the difference between owning a bönd vs owning a stock? What are the advantages and…

A: There are many ways of doing investment and type of investment depends on required rate and risk…

Q: Why is it important to know the interest rate risk when investing in bonds? Does interest rate risk…

A: Interest rate risk is the risk that the bond investment reduces in value which results from changes…

Q: Should financial institutions invest in junk bonds?

A: The answer for the theory question on junk bonds is discussed hereunder.  Dear student,  As you have…

Q: Briefly explain how the yield to maturity (YTM) of a corporate bond is calculated. Is this the…

A: YTM is the compounded annual rate of return earned on debt security purchased on given date and held…

Q: Why do most municipal bonds pay lower interest than riskless Treasury bonds?

A: Municipal as well as Treasury bonds are backed by the government and therefore are less risky. The…

Q: What are the risks associated with stocks that may not be also in bonds?

A: The question is based on the concept of different types of risk associated with different financial…

Q: What are the advantages and disadvantages of investing in stocks vs bonds

A: Investing in stocks has the following risk: Unlike bonds, investment in common stocks does not…

Q: Will you choose to invest in bonds if you are an investor? Why?

A: A bond is a long-term investment instrument that requires a corporation to return the amount of the…

Q: Explain the effect Serial Bonds have on risk from both the perspective of the bond issuer and from…

A: A Serial Bond is that bond issue in which there is maturity, at regular intervals, of a portion of…

Q: Define Coupons bonds.

A: Coupons bonds: The Interest paid on a bond expressed as a percentage of the face value. If a bond…

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: Critically discuss key factors that can influence the yield of a corporate bond.

A: The yield of a corporate bond represents the return that an investor can expect to earn on their…

Q: Why is there a risk of downgrading on long-term bonds?

A: Long-term bonds are usually for longer terms like 10, 20, 25 or 30 years. due to longer durations,…

Q: What is the advantage of issuing bonds instead of obtaining financing from the company’s owners?

A:

Q: Explain callable and putable bonds in detail. Why are they important to issuing firms or investors?

A: Callable bond: The bond having the privilege to redeem by the issuer before maturity.   Puttable…

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: What is corporate bond? What is its mechanism.

A: Bond is a fixed instrument, and it represents loan made by an investor to a corporate or to a…

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: What are junk bonds?

A: Answer: A junk bond is a high risk and high yield bond often considered as unsecured bond that is…

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: What is a bond? What are some features of a bond? How do you value bonds? What factors can affect…

A: Bond is one of the most used debt instruments that are used both by private and government…

Q: What types of investors tend to purchase savings bonds?

A: Savings bonds are often purchased by a variety of investors due to their low-risk nature and…

Q: bonds

A: Convertibles are defined as bonds that are issued by companies who want to grow. Convertibles are…

Q: Which type of bonds offer a higher yield?

A: Bonds are fixed-income instruments representing a loan made by an investor to the government or…

Q: As a bondholder, what risks would you face, and how are these risk factors lower for bonds than they…

A: Bond:  A bonds area unit is typically thought to be a secure investment. Bonds are unit monetary…

Q: What are the advantages and disadvantages of buying bonds mutual funds?

A: Bond Mutual Fund is a pool of funds of small investors, where the fund manager invest the money of…