An unexpected decrease in market interest rates will cause

Assignment Help Financial Management
Reference no: EM131616013

An unexpected decrease in market interest rates will cause:

a. no change in bond prices as the change was unexpected.

b. an increase in coupon rates on new bonds but no change in bond prices.

c. bond prices to decrease and current yields to increase.

d. bond prices to increase and the current yield to decrease.

e. both bond prices and yields to maturity to increase.

Reference no: EM131616013

Questions Cloud

What is the amount of each coupon payment : What is the amount of each coupon payment?
What is the present value of this obligation : YahPoo Plumbing just got flushed out of the business. what is the present value of this obligation?
What is present value of this liability : If the relevant discount rate is 5.5%, what is the present value of this liability?
What is the company target debt-equity ratio : If the company issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio?
An unexpected decrease in market interest rates will cause : An unexpected decrease in market interest rates will cause:
Corporate debt-what is the cost of equity : Bing Crosby Homes has a debt to equity ratio of 1.5. It's WACC is 9.1% and it's cost of debt is 5.5%. There is no corporate debt. What is the cost of equity?
Position your portfolio for this anticipated change in rates : Assume that you manage a bond portfolio for your company. What actions might you take to position your portfolio for this anticipated change in rates?
Calculate weighted average cost of capital : Calculate the weighted average cost of capital for Digital Processing Inc.
What is the effective cost of borrowing in this case : what is the effective cost of borrowing in this case?

Reviews

Write a Review

Financial Management Questions & Answers

  Total annual returns for given period of time

Consider the following table for the total annual returns for a given period of time. What about 95 percent of the time?

  What is your estimate of the stock current price

A company has just paid a dividend of $ 2 per share, D0=$ 2. What is your estimate of the stock's current price?

  What is the return on portfolio

The risk free rate is 4% and the market risk premium is 7%. What is the return on the portfolio?

  Situation the interest rate is interpreted as growth rate

Complete each of the following problems, and be sure to show your work with the appropriate formulation of the basic time value of money formula. Irrigated farmland in Phillips County has been selling at $6,000 per acre. If this farmland is expected ..

  What is its value if the interest is paid annually

Enterprise, Inc. bonds have an annual coupon rate of 11 percent. The interest is paid semiannually and the bonds mature in 9 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 14 percent, what is..

  What is the firms net float

ABC Company writes 369 checks a day for an average amount of $381 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of $125,264 a day in checks that are deposited immediately. Deposited funds a..

  What is the terminal or horizon-value of operations

XYZ Inc has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 9%. The company's weighted average cost of capital is 1..

  Why is it important when dealing with the cost of capital

How can you find the weights to be used for the WACC and which are more appropriate (market versus book)? What does WACC stand for and why is it important when dealing with the Cost of Capital?

  What is the value of the ordinary shares

What is the value of the ordinary shares if you require a 12% return?

  Business activity to finance inventory-accounts receivable

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable.

  Exterior appearance of a small commercial building

A building contractor is evaluating two alternatives for improving the exterior appearance of a small commercial building that he is renovating. The building can be completely painted at a cost of $2, 800. As an alternative, the building can be sandb..

  Hybrid-fueled engine and a six-speed transmission

You have decided to purchase a new automobile with a hybrid-fueled engine and a six-speed transmission. After the trade-in of your present car, the purchase price of the new automobile is $30,000.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd