Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- To earn a high rating from the bond rating agencies, a company would want to have: (check all that apply)
A high profitability ratio
A high quick ratio
A low EBIT to interest coverage ratio
A high debt-to-equity ratip
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- 2) Which should have the higher risk premium on its interest rates, a corporate bond with a Moody's Baa rating or a corporate bond with a C rating? Why?arrow_forwardBonds that have investment-grade ratings from sources such as S&P tend to have higher interest (coupon) rates due to higher default risk. True Falsearrow_forwardThese are corporate bonds that have a higher rate of return with a higher level of risk? Group of answer choices Revenue bonds Junk bonds GOBs Tax increment bondsarrow_forward
- can you may this calculations for each of my bonds?. For each of your bonds, calculate expected defavvult percent loss as = default probability* (1 - recovery rate ). You will need to use the default rates and recovery rates that match each bond's rating. 4. Calculate the overall expected loss to your portfolio as the weighted average of the expected default percent lossarrow_forwardUse 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.arrow_forwardThe 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 changearrow_forward
- Give typing answer with explanation and conclusion Question 16: Which of the following statements about convexity are true? I. Convexity accounts for the curvilinear function of bond rates II. A bond with a very low coupon and a long maturity will have low convexity III. A bond investor would seek to avoid bonds with high convexity. IV. Convexity is defined as the rate of change of the slope of the price/yield curve V. There is an inverse relationship between maturity and convexity a. I. b. II. III. IV. c. I. IV. d. II. IV. V. e. I. II. IV. V.arrow_forwardThe higher the credit rating of a bond then the Select one: Lower the default risk and the lower the yield to maturity Lower the default risk and the higher the yield to maturity Higher the default risk and the lower the yield to maturity Higher the default risk and the higher the yield to maturity Oarrow_forwardTo provide credit rating in the bond market, Bonds are given rankings according to their investment quality, i.e., investment grade and non-investment grade. Which of the following is a measure of the highest investment grade bond? ABC Bbb AAA Ccc- None of the above.arrow_forward
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