Which of the following statements about sinking fund is NOT true?   A Sinking fund provision facilitates the orderly retirement of the bond issue.   B A company would prefer to use sinking fund to call bond if interest rate is below the coupon rate.   C A company would use

Q: Which of the following bond provisions will make a bond more desirable to investors, other things…

A: A bond is a fixed-income investment where an investor loans money to an entity (typically a…

Q: Explain Why you agree or disagree with the following statements. The answer should not be more than…

A: Under stock market, the company is looking for certain investments that can add value. The…

Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…

A: Corporate Bond: Bonds issued by companies, whether they be public or private, are considered to be…

Q: Zero coupon bonds are disadvantageous to the issuing firm if interest rates fall. Select an answer…

A: Bonds are debt instruments that represent a loan from an investor to a borrower, which is usually a…

Q: As market rates of interest rise, investors move their funds into bonds, thus increasing their price…

A: Market interest rates are based on the market conditions. It gets affected with the market inflation…

Q: 5. Which of the following statement is FALSE? C. Stocks provide higher return over bonds. A. Bond is…

A: Bonds are debt instruments which provide constant cash flows to the bond holders. Equity can provide…

Q: Which bond usually will have a higher liquidity premium:one issued by a large company or one issued…

A: The liquidity premium may be a premium asked by speculators when the reasonable market value of any…

Q: It's important for investors to understand what a stock's yield is and why it matters. Define and…

A: Introduction: The earnings made and realized on an investment over a given period are called…

Q: When interest rates rise, bond refunding becomes quite popular. Select one: True O False

A: When interest rates rise, bond refunding becomes more popular among issuers. This is because issuers…

Q: How are investors of zero-coupon bonds compensated for making such an investment?   A. Such bonds…

A: Bond are debt instruments issued by companies. Zero coupon bonds, as the name indicates, do not pay…

Q: Tell whether the following statements describe the characteristics of stocks or bonds. e. Issues of…

A: Stocks are the shares held by owners of the companies. They represent part ownership in the…

Q: Corporate bonds have higher yields than comparable Treasury bonds because of the higher____ O…

A: Explanation :-This is because :-1) A corporate bond can default on its obligation to repay interest…

Q: When a firm gets riskier what will happen to its bonds Multiple Choice   the stated interest rate…

A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…

Q: If a new competitor with scale enters, does that increase, decrease, or have no effect on the credit…

A: solution concept credit spread                 The term Credit spread is widely used while assessing…

Q: When a firm gets riskier what will happen to its bonds Multiple Choice   the market interest rate…

A: The primary risk associated with bonds are interest rate risk and market risk some corporation bonds…

Q: Zero coupon bonds are an example of ___________. a. convertible bonds b. extendible notes c.…

A: The zero-coupon bond is a special type of bond which does not pay annual interest. The return on…

Q: When market volatility increases, does that increase, decrease, or have no effect on the credit…

A: Market Volatility means deviation of market for a specific period.  The difference between the yield…

Q: Which of the following statements is true? a   A bond with a sinking fund will have the higher…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Adding warrants as a "sweetener" to bonds will:  Group of answer choices reduce the value of the…

A: A warrant is a financial instrument that gives the holder the right, but not the obligation, to buy…

Q: True or false: The financial status of the issuer will affect the coupon rate that issuer pays on…

A: The coupon rate on a bond is a crucial element determined by various factors, reflecting the…

Q: Does a steady low-volatility environment, increase, decrease, or have no effect on the credit spread…

A: answer are as follows.

Q: Which of the following is incorrect regarding margin trading? O a. The relationship between security…

A: Margin trading (MT) is the benefit which is provided by the trader to the investors to purchase…

Q: Which of the following is correct?   Group of answer choices 1. The lower the price you pay for a…

A: An overpriced bond is one whose price is more than its value. Therefore, 2nd option is incorrect.…

Q: Which of the following sentences about bonds’ optional features is true? Explain  A.A borrower will…

A: Bonds are financial instruments that represent a form of debt or borrowing. They are typically…

Q: Which of the following lowers the required interest rate that firms have to pay on their bonds?…

A: Companies tend to pay larger interest rates as the risk is raised to the bond investor since the…

Q: A bond trader observes the following information:• The Treasury yield curve is downward sloping.•…

A: The objective of the question is to determine the correct statement about the yield of Treasury and…

Q: he following statements is TRUE? emand for a bond declines when it becomes less liquid, decreasing…

A: A liquid asset is one that can be converted to cash quickly and easily. Liquid assets include cash,…

Q: Why would a company typically choose to source external financing by issuing bonds rather than…

A: Bonds are debt instruments that are used by institutions to raise capital. The face value and the…

Q: rue or False: Corporations are very interested in their potential bond rating as it impacts their…

A: Bonds are sources of long term capital for companies and bonds are paid annual interest payment and…

Q: 3. When the bond stated interest rate (coupon rate) exceeds the market rate, the bonds are issued at…

A: When Bonds coupon rate is more than Market rate treated as Issued at premium, such excess amount of…

Q: When selling bonds at a premium, the premium received effectively a.does not affect the cost of…

A: Premium means selling of bond at price higher than face value.

Q: Why is it said that zero-coupon bonds lock in the reinvestment rate?

A: The objective of the question is to understand why it is said that zero-coupon bonds lock in the…

Q: Beacuase the conversion feature in a convertible bond is valuable to  bondholders, convertible bond…

A: No, the company cannot lower the cost of borrowing by selling the convertible debt.

Q: Which statement is FALSE regarding bonds?Select one:The pay back their face value within their…

A: Bonds, when issued, represent debt obligations of the firm, not equity. Therefore, their issuance…

Q: When the contract rate of a corporate bond is lower than the market rate, what happens to the face…

A: First, let's understand the terms. The contract rate (also known as the coupon rate) is the interest…

Q: If a bond has a credit rating of A, which of the following is not true: A. The bond has more risk…

A: bond has different features

Q: if we see an increase in default rates, what may that mean for the junk bond market and for…

A: Junk bonds are those bonds that carry a very high risk of default.  These bonds are issued by…

Q: Why might a firm prefer to finance its investments with bonds rather than stocks? Alternatively, why…

A: Introduction: Bond is nothing but debt securities issued by a company or government if they want to…

Q: The higher the risk of a security, the higher its expected return will be. A bond's risk level is…

A: A bond is a financial instrument that is freely traded on the exchanges and has a freely floated…

Q: Under normal conditions, which of the following would be most likely to increase the coupon rate…

A: The objective of the question is to identify which of the given options would most likely increase…

Q: Bonds that have investment-grade ratings from sources such as S&P tend to have higher interest…

A: Investment grade ratings of bonds refer to a credit rating assigned by a rating agency to indicate…

Q: Identify those trends that are unfavorable from theviewpoint of a bondholder. (More than one answer…

A: Bond can be referred to as that form of finance wherein, the issuing entity is obliged to pay a…

Characteristics of Bonds