(a)
To examine:
The reason due to which price range is greater for the
Introduction:
Fixed rate bond: Securities (debt instruments) which have a fixed coupon rate usually which is predetermined. These bonds are usually issued for long term.
Floating rate bond: Securities (debt instruments) which have a floating coupon rate i.e. it keeps on changing with changes in market. It is usually equal to
(b)
To examine:
floating rate note is not always sold at par.
Introduction:
Fixed rate bond: Securities (debt instruments) which have a fixed coupon rate usually which is predetermined. These bonds are usually issued for long term.
Floating rate bond: Securities (debt instruments) which have a floating coupon rate i.e. it keeps on changing with changes in market. It is usually equal to money market reference rate as like LIBOR, MIBOR.
(c)
To examine:
The call price for the floating-rate note is of not so much significance to investors.
Introduction:
Fixed rate bond: Securities (debt instruments) which have a fixed coupon rate usually which is predetermined. These bonds are usually issued for long term.
Floating rate bond: Securities (debt instruments) which have a floating coupon rate i.e. it keeps on changing with changes in market. It is usually equal to money market reference rate as like LIBOR, MIBOR.
(d)
To examine:
The probability of call for the fixed rate note is high or low.
Introduction:
Fixed rate bond: Securities (debt instruments) which have a fixed coupon rate usually which is predetermined. These bonds are usually issued for long term.
Floating rate bond: Securities (debt instruments) which have a floating coupon rate i.e. it keeps on changing with changes in market. It is usually equal to money market reference rate as like LIBOR, MIBOR.
(e)
To determine:
Coupon rate to issue the bond at par value where the firm issue a fixed rate note with 15-years maturity which is callable after five years.
Introduction:
Fixed rate bond: Securities (debt instruments) which have a fixed coupon rate usually which is predetermined. These bonds are usually issued for long term.
Floating rate bond: Securities (debt instruments) which have a floating coupon rate i.e. it keeps on changing with changes in market. It is usually equal to money market reference rate as like LIBOR, MIBOR.
(f)
To examine:
The entry for yield to maturity for the floating rate note not appropriate.
Introduction:
Fixed rate bond: Securities (debt instruments) which have a fixed coupon rate usually which is predetermined. These bonds are usually issued for long term.
Floating rate bond: Securities (debt instruments) which have a floating coupon rate i.e. it keeps on changing with changes in market. It is usually equal to money market reference rate as like LIBOR, MIBOR.
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