Junk bonds are mainly associated with - interest rate risk -default/credit risk
Junk bonds are mainly associated with
- interest rate risk
-default/credit risk
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Junk bonds are mainly associated with
- interest rate risk
-default/credit risk
Bond ratings classify bonds based on: interest rate, inflation rate, and default risk. liquidity, interest rate,...
Bond ratings classify bonds based on: interest rate, inflation rate, and default risk. liquidity, interest rate, and default risk. liquidity, market, and default risk. default risk only. default and liquidity risks.
bonds with relatively low risk of default are called 1) Bonds with relatively low risk of...
bonds with relatively low risk of default are called
1) Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) a above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade C) high quality; lower grade B) investment grade; junk bonds D) high quality; junk bonds 2) Which of the following bonds are considered to be default-risk free? A) municipal bonds...
10a. If the expected default rate on a credit card is 8.5% and the risk-free rate is 3.25%, what interest rate must a fi...
10a. If the expected default rate on a credit card is 8.5% and the risk-free rate is 3.25%, what interest rate must a financial institution charge on the credit card in order for its expected return to equal the risk-free rate? If the financial institution assumes a 0% recovery rate in the event of default, what interest rate will the financial institution charge? b. If the expected default rate on a 1-year home equity loan is 2.5% and the financial...
Just the answer please 13. Bonds with relatively low risk of default are called securities and...
Just the answer please
13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade bonds....
Can you explain intuitively why the interest-rate risk is positively associated with maturity but negatively associated...
Can you explain intuitively why the interest-rate risk is positively associated with maturity but negatively associated with coupon rate of the debt instrument that you hold? How does the interest-rate risk vary with the level of interest rates? For example, during the recession when market interest rates are low, does the overall level of interest-rate risk become higher or lower? Imagine that you’re managing a portfolio of long- and short-term bonds. If you predict a rise in interest rates, how...
What are your thoughts about the relative level of default risk rates? Default risk is generally...
What are your thoughts about the relative level of default risk rates? Default risk is generally the added interest rate load, over and above Treasuries, that measure the relative default risk of bonds. Is the risk charge for risk bonds such as corporates, mortgages, or international bonds going to increase or decrease?
14. Junk bonds are bonds that are rated less than investment grade by bond-rating agencies a)...
14. Junk bonds are bonds that are rated less than investment grade by bond-rating agencies a) True b) False 15. A secured loan has a claim to specific assets ofthe borrower in the case of default. a) True b) False 16. In a conventional interest rate swap agreement, the swap buyer agrees to make a number of fixed interest rate payments to the swap seller a) True b) False 17. Currency swaps can be designed to reduce foreign exchange risk....
Why are junk bonds riskier than investment grade bonds? How do investors in junk bonds reduce...
Why are junk bonds riskier than investment grade bonds? How do investors in junk bonds reduce their risk exposure? Why are the GSEs said to be characterized by moral hazard? Any evidence that this is a serios problem?
31. Explain why U.S. Government bonds are default risk free while Greece Government bonds are not default risk free...
31. Explain why U.S. Government bonds are default risk free while Greece Government bonds are not default risk free.
Determinants of Interest Rate for Individual Securities A particular security's default risk prem...
Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 4.70 percent. For all securities, the inflation risk premium is 3.45 percent and the real interest rate is 3.60 percent. The security's liquidity risk premium is 1.30 percent and maturity risk premium is 1.95 percent. The security has no special covenants. What is the security's equilibrium rate of return?
bonds with relatively low risk of default are called
1) Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) a above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade C) high quality; lower grade B) investment grade; junk bonds D) high quality; junk bonds 2) Which of the following bonds are considered to be default-risk free? A) municipal bonds...
Just the answer please
13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade bonds....
14. Junk bonds are bonds that are rated less than investment grade by bond-rating agencies a) True b) False 15. A secured loan has a claim to specific assets ofthe borrower in the case of default. a) True b) False 16. In a conventional interest rate swap agreement, the swap buyer agrees to make a number of fixed interest rate payments to the swap seller a) True b) False 17. Currency swaps can be designed to reduce foreign exchange risk....
31. Explain why U.S. Government bonds are default risk free while Greece Government bonds are not default risk free.
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