Corporate bond yields rise while treasury bond yields fell

Reference no: EM13687017

The US treasury isn't the only issue of bonds. Corporations also issue bonds that have future payment structures like U.S. Treasuries. Of course, unlike the federal government, corporations can go bankrupt, leaving their bondholders unable to collect all of their scheduled payments. Because of this risk of default, corporate bonds should have a higher yield in equilibrium than similarly structured Treasury bonds. Under what economy-wide economic conditions, if any, might you expect to see corporate bond yields rise while Treasury bond yields fell?

Reference no: EM13687017

Questions Cloud

What factors will cause a change in demand and supply : What factors (determinants) will cause a change in demand and what factors (determinants) can cause a change in supply? Can you give any current examples of a determinant of demand that you see changing in any industry or marketplace or a determinant..

Average annual rate of return on your investment : Presume you buy a share of stock for $20 and sell it for 40. Then your profit is $20. If that happens within a year, your rate of return is an impressive 100%. If it takes 6 years, what would be the average annual rate of return on your investment?

Cups size is independently drawn from the distribution : Presume the expected size of each cup of punch is 2 ounces and the standard deviation of the size of a cup is 1/2 ounce and each cup is poured independently. Presume each cup's size is independently drawn from the distribution. What is the approximat..

Consumer surplus at this competitive equilibrium : Market demand is p = 540 - q and the market supply equation is p = 60 + 2q. Use this data for the following questions. (The question is in bold bellow) The competitive equilibrium is:? Consumer surplus at this competitive equilibrium is:?

Corporate bond yields rise while treasury bond yields fell : The US treasury isn't the only issue of bonds. Corporations also issue bonds that have future payment structures like U.S. Treasuries. Of course, unlike the federal government, corporations can go bankrupt, leaving their bondholders unable to collect..

Compute the current yield and the coupon rate : Consider a $1,000.00 face value bond with a $40 annual coupon and 8 years until maturity. Compute the current yield and the coupon rate for each of the following: The bond is purchased for $850

Money market as institutions sell bonds to obtain more money : If the real money demand is greater than the real money supply interest rates must rise to reach equilibrium in the money market as institutions sell bonds to obtain more money.

Presume a treasury bill has a purchase price : Presume a Treasury bill has a purchase price of $9850; a face value of $10,000 and 99 days to maturity. Compute the yield to maturity. Answer as a percent and round to two decimal places

Evaluate purchases estimate the cost to purchase new piece : Remerowski Corporation Inc. asks you to estimate the cost to purchase a new piece of production equipment in the past for $10000 the original equipment had a capacity of 2,000 units, while the new equipment has a capacity of 1000 units.

User Account

All Pages