In a few sentences, answer the following question as completely as you can. In discussing asset pricing, your textbook suggests that an investor will be indifferent between two bonds with equal yield to maturity, as long as they are of equivalent risk. Can you think of any real-world factors that might make an investor prefer one of these bonds over the other?

Now suppose there is no financial intermediary to handle liquidity shocks. However, at t = 1 a market for bonds opens up and agents can trade their wealth at t = 1 for wealth at t = 2. Each bond pays 1 at t = 2 and its price is pM. Calculate the consumer's optimal investment decision IM at t = 0, the price of the bond pM, and the optimal consumption in the two states cM, cM. Compare the mutual fund and bond market allocations: are c4 and c bigger or smaller than cf and c, respectively?

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Use the following information to answer this question. In your answers, ignore the negative sign, if any.    Yield on Bond A Yield on Bond B Yield on Bond C 5.50% 6.50% 3.50%   a) What is the yield spread between bonds A and B (in basis points)?  b) What is the relative yield spread between bonds B and C? Bond C is your basis.  c) What is the yield ratio between A and C? Bond C is your basis.

please explain whether it is true or false

Give Correct Answer with explanation and also provide explanation of Correct and incorrect option

All things being equal are high convexity bonds more or less desirable toan investor and why? Critically and fully discuss.

Why do at least some investors like to invest in asset-backed securities? Check all that apply: ABS are less risky than bonds with the same rating. It lowers their capital requirements. It gives them control over more assets. ABS often pay higher interest rates than bonds with the same rating.

Which one of the following expressions about risk and returns is wrong? A. In general, one reason why a stock is riskier than a bond is that because cash flows from a bond are known and promised, whereas cash flows from a stock are neither known nor promised. B. According to CAPM model, a well-diversified portfolio will have a beta which equals to 0. C. Risk premium is the extra return provided on risky assets to compensate for risk. The difference between risky return and the risk-free return. D. Unexpected return happened because new information came to light which caused our expectations about prices and returns to change.