Reference no: EM132606130
Question - Two bonds A and B have the same credit rating, the same par value and the same coupon rate. Bond A has 30 years to maturity and bond B has five (5) years to maturity. Please demonstrate your understanding of interest rates risk by answering the following questions:
Discuss which bond will trade at a higher price in the market
Discuss what happens to the market price of each bond if the interest rates in the economy go up.
Which bond would have a higher percentage price change if interest rates go up?
Please substantiate your argument with numerical examples.
As a bond investor, if you expect a slowdown in the economy over the next 12 months, what would be your investment strategy?
Familiarity with random variables is essential to understand the basics of portfolio theory. Given that CLA2 assignment is about portfolio formation, you need to strengthen your skills in dealing with random variables. Please review and explain the significance of basic concepts about random variables, namely, the mean, the variance, the standard deviation, and the correlation.
|
How much should be recorded on December
: The original estimated life was five years.. It was sold for $5,600 cash. Using this information, how much should be recorded on December 31 for the Gain
|
|
What is the total value assigned to the new piece
: The new piece of equipment is expected to have a 10 year life and a salvage value of $15,000. What is the total value assigned to the new piece of equipment
|
|
Find how much is the depreciation expense
: Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense
|
|
What is the target variable cost per unit
: Fixed costs are $340,000 per year and cannot be reduced. What is the target variable cost per unit assuming units sold are equal to units produced
|
|
Which bond would have a higher percentage price change
: Which bond would have a higher percentage price change if interest rates go up? Discuss which bond will trade at a higher price in the market
|
|
How much cash does each partner receive
: A local partnership is liquidating and has only two assets (cash of $10,000 and land with a cost of $35,000). How much cash does each partner receive
|
|
Created by legislatures and imposed by courts
: Sentencing philosophies and models are created by legislatures and imposed by courts.
|
|
Calculate Waterway rate of return on assets
: Calculate Waterway's rate of return on assets (1) using the asset turnover and pro?t margin, and (2) using net income
|
|
Prepare the entry to record depreciation
: Machinery purchased for $39,200 by Ayayai Corp. on January 1, 2015, Prepare the entry to record depreciation for 2020
|