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What happens to
a) Decrease in wealth
b) Increase in risk
c) Decrease in liquidity
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- The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates changeAs interest rates, and consequently investors' required rates of return, change over time, the ________ of outstanding bonds will also change. a. price b. par value c. coupon interest payment d. maturity dateMoney duration is the appropriate measure of interest rate risk for bonds with embedded options. Select one: True False
- How does one determine the required rate of return of a bond, the cash flows of a bond and the value of a bond? How do you determine if a bond is a good investment? Are long-term bonds riskier than short-term bonds? Explain and Discuss.c. Which yield might investors expect to earn on these bonds, and why?How do you calculate the current value (price) of a bond? Explain through the formula and its description in your own words. How is the bond price affected by the change in interest rates and why?
- How do you calculate the current value (price) of a bond? Explain through the formula and its description in your own words. How is the bond price affected by the change in interest rates and why? Simple answers please.which of the below has a negative correlation with the return on bonds ? a. Taxability b. Default risk c. Callable bonds d. Liquidity e. DebentureHow Interest Rates Affect Bond Prices. Explain the impact of a decline in interest rates on an investor’s required rate of return.
- If interest rates rise after a bond issue, what will happen to the bond’s price and YTM? Does the time to maturity affect the extent to which interest rate changes affect the bond’s price? (Again, an example might help you answer this question.)NOTE GIVE CONCEPTUAL ANSWER IN SHORTDescribe Why Some Bonds are Risky: Default Risk: Risk Premium: Impact of Economic ConditionsInterest Rate risk depends upon how sensitive the bond price is to interest rate changes (i.e., maturity and coupon rate). T/F
