Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
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
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- Why What kind of stream of income does a debt security pay for the duration of the security? A fixed stream of income or a stream of income that is decided by a defined formula?arrow_forwardWhat is the main reason for the yield differences between treasury bond yield and corporate bond yield? a. Credit risk b. Systemic Risk c. Liquidity risk d. Interest rate riskarrow_forwardExplain the Structuring the Payment for a Target Debt Coverage Ratio?arrow_forward
- How do bond ratings affect the default risk premium?arrow_forwardWhat is the Relationship between Changes in Interest Rates, Investor Returns, and “Going-In”Cap Ratesarrow_forwardWhat is a bond spread and how is it related tothe default risk premium? How are bond ratingsrelated to default risk? What factors affect a company’s bond rating?arrow_forward
- What are the potential problems or limitations of using methods, to estimate the cost of debt, that relies on bond ratings?arrow_forwardIdentify/explain the relationship between coupon rate and yield to maturity for: Discount Bonds Premium Bonds Par Value Bondsarrow_forwardThe interest rate observed in the marketplace for a debt instrument? Observed interest rate Inflation-free interest rate Risk-free rate of interest Real rate of interestarrow_forward
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