Which of the following may affect yields (interest rates) on debt securities? default risk premium liquidity premium tax adjustment default risk premium AND liquidity premium default risk premium AND liquidity premium AND tax adjustment

Q: Define the term trading debt investments.

A: Investment is an asset or an item purchased today in the hope that it will generate income in the…

Q: Which of the following types of debt securities protect investors against interest rate risk?   a.…

A: An extendable bond  is a type of debt security that includes an option Which allows the bondholder…

Q: c. Which yield might investors expect to earn on these bonds, and why?

A: Bond yield is the expected return on an invested bond. It is the discount rate which calculates its…

Q: Why is the discount and premium on bond issues amortized?

A: The bonds can be issued at premium or discount on the basis of market rate of similar bonds.

Q: Discuss the difference between debt securities market and equity securities market.

A: The Debt securities market refers to the market which trades in debt that has to be repaid to the…

Q: Which factor(s) lead to the difference of the interest between T-bill and a short-term corporate…

A: The T-bill is the debt instrument used by the government to raise capital. It has a maturity of one…

Q: What is interest rate risk, and how does it relate to callable bonds? Explain using an example of…

A: This question discusses callable bonds.

Q: What is the main reason for the yield differences between treasury bond yield and corporate bond…

A: A treasury bond is issued by the government and is backed by the treasury whereas a corporate bond…

Q: How are financial markets classified according to maturity of the claim?

A: In general, financial markets refer to any marketplace where securities are traded, such as the…

Q: On a balance sheet, what valuation must be reported for short-term debt investments in trading…

A: Short term debt investments are those debt funds or mutual funds that are obtained for a short…

Q: Why discount and premium on issue of bonds is amortized?

A: Bonds are intangible assets, the amortization is similar to depreciation, it means systematically…

Q: Which of the following deals with instrument relating to long-term debt and equity? Select one: A.…

A: Long term debt and equity are investments made for the long term in either the debt of a company via…

Q: In regard to a bond discount or premium, what is the effective-interest amortization method?

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: Clearly explain the difference between debt securities market and equity securities market

A: Equity securities market is the place where equities of corporates are traded, i.e. purchased and…

Q: What is the straight-line amortization approach with regards to a bond discount or premium?

A: Bond with a straight-line amortization schedule: The straight-line amortization technique is a way…

Q: When does a premium on bonds payable occur?

A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…

Q: What is the effective interest rate of a bond or other debt instrument measured at amortized cost?…

A: The effective rate is increased times the bond's value at the beginning of the accounting amount to…

Q: What are the different factors that affect the interest rates set by issuers of debt securities?

A: Debt securities seem to be financial assets which guarantee their holders interest payments in the…

Q: In regard to a bond discount or premium, what is the straight-line amortization method?

A: Straight-line amortization bondStraight line method of amortization is a process of amortizing…

Q: The interest rate observed in the marketplace for a debt instrument?     Observed interest rate…

A: Interest rate that is observed in the market place for debt instrument is real rate of interest.…

Q: How do premiums and discounts on long-term debt securities affect interest expense?

A: Long term debts are used by the large organisations to raise the fund and utilise them for various…

Q: trading

A: Ans. Debt investments include government, corporate and municipal bonds and includes real estate…

Q: Discuss how a form of debt can be classified as both Current and Long-Term Liabilities.  Why do…

A: Long Term Liabilities are the liabilities that become due for more than one year. They are the…

Q: Are bonds considered as fixed income securities?

A: Bonds are a type of loan taken by the borrower that promises to pay a certain sum as an interest to…

Q: What is the effective-interest amortization mechanism for a bond discount or premium?

A: Method of interest amortization that is effective: Interest expenditure is calculated as follows:…

Q: Yields on debt securities are affected by credit risk, tax status, liquidity and term to maturity.…

A: Debt securities may include various securities that pay fixed interest and are issued with fixed…