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 is the expected return of the corporate bond​ investment?

A: Expected return of the corporate bond investment is calculated using following equation Expected…

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: 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: 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: what is the difference between an investment grade bond and a junk bond?

A: Solution:- There are various companies like S&P etc, which give credit ratings to the companies…

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: If you are an investor will you choose to investment in bonds? Why?

A: Bond is a debt security.

Q: What is the difference between stocks and bonds?

A: Particulars Stock Bond Type Equity Debt Ownership Ownership of the company is vested in stocks…

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: 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: 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…