Callable bond has less reinvestment risk

Assignment Help Financial Management

Reference no: EM131825334

1. A callable bond has less reinvestment risk and more price appreciation potential than a similar but option-free bond. This statement is most likely

a. Incorrect with respect to price appreciation potential but correct with respect to reinvestment risk

b. Incorrect with respect to reinvestment risk but correct with respect to price appreciation potential

c. Incorrect with respect to both reinvestment risk and price appreciation potential

d. Correct with respect to both

2. A U.S. Treasury note with exactly 4 years maturity can most likely be broken into

a. Four Treasury STRIPS

b. None, only Treasury Bonds can be converted to STRIPS

c. Nine Treasury STRIPS

d. Eight Treasury STRIPS

e. Five Treasury STRIPS

Reference no: EM131825334

Questions Cloud

Is there an arbitrage opportunity : Assume the dividend rate is 3% and there’s an at-the-money put expiring in 2 years that costs $15. Is there an arbitrage opportunity?

What is local operating margin : What is Local's operating margin? What is Local's net profit margin?

What is rate of return on the incremental investment : What is the rate of return on the incremental investment ?

Calculate the required initial investment by entrepreneur : Fixed assets of $500,000 will be needed to start the venture. calculate the required initial investment by the entrepreneur.

Callable bond has less reinvestment risk : A callable bond has less reinvestment risk and more price appreciation potential than a similar but option-free bond. This statement is most likely

What was GEs book debt-equity ratio : What was GE's book debt-equity ratio? What was GE's market, debt-equity ratio? What was GE's enterprise value?

Bond has convexity : If a bond has a convexity of 60 and a modified duration of 10, the convexity adjustment a for a 25 basis point drop in interest rate is closest to

An amortizing security has more reinvestment risk : An amortizing security has more reinvestment risk and more interest rate risk than a comparable Zero-Coupon bond. This statement is most likely

What would be annualized rate of return : Suppose you invest $ 2736 today to start a business. In 9 years you hope to sell this company for $ 19281. What would be your annualized rate of return?

User Account

All Pages