Effect on the YTM due to increment in interest ratio. Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

Question

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Answer 1

Question

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

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Students have asked these similar questions

Describe the likely effect on the yield to maturity of a bond resulting from:a. An increase in the issuing firm’s times-interest-earned ratio.b. An increase in the issuing firm’s debt-to-equity ratio.c. An increase in the issuing firm’s quick ratio.

The yield to maturity on bonds is usually the same as a. yield to call. b. current yield. c. the market rate of interest. d. the coupon rate of interest.

discuss the relationship between the percentage of a bonds price due to its coupon payments and the time to maturity.

Answer 2

Question

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

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Answer 3

Question

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

Answer 6

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

Answer 7

Chapter 14, Problem 28PS

A

Summary Introduction

To explain: Effect on the YTM due to increment in interest ratio.

Introduction: YTM is basically a return rate of the bond if it is buying at the current price and keeps by the investor till the date of the maturity. YTM is also called market return rate or market interest rate. YTM gives the final return value of the bond after maturity.

Answer 8

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

Answer 9

B

Summary Introduction

To explain: Effect on the YTM if debt-to-equity ratio increases.

Introduction: The debt-to-equity is a ratio of the company’s total liabilities to the share equity of the firm. The firm’s financial leverage is calculated by using this tool. This financial tool establishes a relation between liquidity and shareholder equity value.

Answer 10

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

Answer 11

C

Summary Introduction

To explain: The effect on the YTM if quick ratio increases.

Introduction: The quick ratio is a financial term that is used to measure the liquidity of the firm. It is also known as the acid test ratio. The quick ratio compares the total amount, the amount on securities, and the equivalent cash amount.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

Ch. 14 - Prob. 1PS Ch. 14 - Prob. 2PS Ch. 14 - Prob. 3PS Ch. 14 - Prob. 4PS Ch. 14 - Prob. 5PS Ch. 14 - Prob. 6PS Ch. 14 - Prob. 7PS Ch. 14 - Prob. 8PS Ch. 14 - Prob. 9PS Ch. 14 - Prob. 10PS

Solution Summary: The author explains the inverse relationship between bond price and YTM.

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Chapter 14 Solutions