Time-to-maturity bonds due to coupon repayment uncertainty

Assignment Help Financial Management
Reference no: EM13923684

Assume that interest rates exhibit an unexpected increase of 1%, in general, we would expect bond prices to         ________. However, we would likely see that the price change of ________ time-to-maturity bonds be greater         than the price change of ________ time-to-maturity bonds due to coupon repayment uncertainty.

a. Decrease, Longer, Shorter

b. Decrease, Shorter, Longer

c. Increase, Longer, Shorter

d. Increase, Shorter, Longer

Reference no: EM13923684

Questions Cloud

How design flexibility might influence investors preference : How differences in contract liquidity and design flexibility might influence an investor's preference in choosing one instrument over the other.
What is a linear implementation : What is a linear implementation? What kind of implementation of the ADT table is appropriate for retrieval-dominated applications, if the maximum size of the table is known? Why
What is the order m of the maximum : Light of 650 nm is incident on two slits. A maximum is seen at an angle of 4.10 degrees and a minimum of 4.78 degrees. What is the order m of the maximum and what is the distance d between the slits?
Compare dividends-total distributions to investors : Adams Inc. expects EBIT of $50 million if there is a recession, $100 million if the economy is normal, and $150 million if the economy expands. Bellingham Inc. also expects EBIT of $50 million if there is a recession, $100 million if the economy is n..
Time-to-maturity bonds due to coupon repayment uncertainty : Assume that interest rates exhibit an unexpected increase of 1%, in general, we would expect bond prices to         ________. However, we would likely see that the price change of ________ time-to-maturity bonds be greater         than the price chan..
What is the component cost of debt : The Kenny Electric Company's non callable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semi annually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax ..
Karyotype of drosophila melanogaster : The karyotype of Drosophila melanogaster contains 4 pairs of homologous ___________.
Rapid retail comparative statement of income : Rapid Retail Comparative Statement of Income. complete the increase (decrease) in dollars and percent. comment on trends.
What are the potential risk factor for derivative strategies : What are the benefits and potential risk factors for undertaking these derivative strategies in lieu of direct cash-oriented investments?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current yield of the bond-financial calculator

The corporate bond of Blue Sky Industrial currently sells at $1,094.00. The bond has an annual coupon rate of 6% and a face value of $1,000. There are 12 years remaining to maturity. What is the current yield of the bond? The ABC bond has an annual c..

  What price should it charge for these bonds

Arts and Crafts Warehouse wants to issue 15-year, zero coupon bonds that yield 7.5 percent. What price should it charge for these bonds if the face value is $1,000? (Assume semi-annual compounding.)

  The origination of a home mortgage loan is considered

The origination of a home mortgage loan is considered to be a

  Bond with coupon rate-what is invoice price of the bond

A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100:03. What is the invoice price of the bond? The coupon period has ..

  What is the expected return on an investment

What is the expected return on an investment given the following: outcome 1 probability: 0.42 return: -2% outcome 2 probability: 0.37 return: 33%

  What is the approximate yield to call

What is the approximate yield to call of a 10% coupon rate, $1,000 par value bond, currently priced at $1200, if the call can be made in seven years at a price of $1,025?

  What is the dividend per share

BDJ, Inc. has 31,000 shares of stock outstanding with a market price of $15 per share. If net income for the year is $155,000 and the retention ratio is 75%, what is the dividend per share on BDJ Inc.'s stock?

  Hart enterprises recently paid dividend

Hart Enterprises recently paid a dividend, D0, of $2.75. It expects to have no constant growth of 25% for 2 years followed by a constant rate of 8% thereafter. The firm's required return is 10%.

  Emerging performance management topics

Create a post that presents your view of one or two key emerging performance management topics in current academic or professional debates. Provide references. Present the topics discussed in the articles and explain their importance to the field ..

  Calculate the expected return and risk for general fudge

Calculate the expected return and risk (standard deviation) for General Fudge for 200X, Suppose you had to choose between General Fudge and Stock B, with expected return E(rB)=9% and ?B=6%. Which is preferred on a stand-alone basis?

  First of each month to his retirement account.

Starting today, George is going to contribute $300 on the first of each month to his retirement account. His employer will contribute an additional 50% of the amount George contributes. If both George and his employer continue to do this and he can e..

  New project analysis-annual cash flows

You must evaluate a proposed spectrometer for the R&D department. The base price is $270,000, and it would cost another $40,500 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold aft..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd