Interest costs for short-term debt are generally lower than interest costs for long-term debt becauseA. short-term debt is more flexible, allowing a match of short-term needs with short-term financing.B. the term structure of interest rates generally reflects an upward sloping yield curve.C. investors demand higher returns on short-term debt due to liquidity concerns.D. both A and B.

Companies and people use debt to tide over liquidity problems or to get access to funds to buy…

Interest costs for short-term debt are generally lower than interest costs for long-term debt because A. short-term debt is more flexible, allowing a match of short-term needs with short-term financing. OB. the term structure of interest rates generally reflects an upward sloping yield curve. O C. investors demand higher returns on short-term debt due to liquidity concerns. O D. both A and B.

Interest costs for short-term debt are generally lower than interest costs for long-term debt because A. short-term debt is more flexible, allowing a match of short-term needs with short-term financing. OB. the term structure of interest rates generally reflects an upward sloping yield curve. O C. investors demand higher returns on short-term debt due to liquidity concerns. O D. both A and B.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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it say all answers above are incorrect, i need the yield on the debt percentage plz and thank u
Leverage is gained when which of the following exists? O Return on assets is greater than the interest on borrowed funds O Interest coverage ration is greater than 1 O Interest coverage ratio is less than 1% O Interest on borrowed funds is greater than the return on assets
What is meant by the real risk-free rate of interest? Seleccione una: a. The nominal risk-free interest rate, less the expected inflation. b. The rate actually used in the market, not in textbooks. c. The rate quoted on short-term Treasury bills. d. The opportunity cost of foregoing consumption, representing the rate that must be offered to individuals to persuade them to save rather than consume.
Compared to junior unsecured debt, subordinated debt exhibits __________ credit risk, __________ yield, and __________ recovery rate. A. lower / lower / higher B. higher / higher / lower C. higher / lower / lower D. lower / higher / lower
1. When the effective cost of debt is greater its the nominal cost,a. the initial net measurement of the bond is more than the face value.b. The net proceeds is more than the face value.c. The entity records a discount on the bond payable.d. The interest expense is less than the interest payments.2. Which of these statement are true? [S1] The dividend decision generally involves the same factors as the earnings retention decision. [S2] Under the Dividend Relevance Theory, dividends are valued more than capital gains.3. The cost of retained earnings is less than the cost of ordinary shares because ofa. the issuance cost.b. the trust fund doctrine.c. agency costs of free cash flow.d. the taxation on earnings.4. GHI Corp., a new and relatively unknown entity, has issued 5-year bonds with an interest rate of 30%. These may also be traded in by the holder for 5 ordinary shares for every P1,000 face value of the bond. GHI added this feature so that once it has better profits, it can entice…
With regard to interest rate sensitivity measures and bonds: Group of answer choices C. Convexity attempts to capture the sensitivity of a bond’s duration to changes in interest rates. D. Both B & C B. Duration is related to yield approximation and convexity is related to price. A. Convexity is related to yield approximation and duration is related to price
Intermediaries can reduce positive income (maturity) gaps by interest sensitive and by _the proportions of their liabilities that are the proportion of their assets that are interest sensitive. Select one: O a increasing; decreasing O b. decreasing: increasing O c. decreasing decreasing O d. increasing; increasing
mc question attached
Select the correct statement: The value of a premium bond will fall over time, if cost of debt (rd) decreases The value of a discount bond will fall over time, if cost of debt (rd) does not change The value of a discount bond will increase ove time, if cost of debt (rd) does not change The value of a premium bond will increase over time, if cost of debt (rd) does not change
Choose from liquidity premium, taxability premium, default risk premium, maturity premium. 1.For a long term bond, bondholders demand a higher yield as compensation is called?2.When a bond has poor credit rating, bondholders demand a higher yield as compensation is called?3.When a bond has less frequent trading, bondholders demand a higher yield as compensation is called?
A synthetic Collateralized Debt Obligation uses credit default swaps to increase the credit risk of its assets. O True O False
Contraction risk is the risk that loan principal will be repaid more rapidly than expected, typically when interest rates have increased. Select one: True False

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