Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
A credit spread refers to the difference in interest rate between a corporate bond and a comparable maturity government bond. Suppose interest rate on a five-year corporate bond is 6 percent and that on a five-year government bond is 5 percent. The interest on corporate bond consists of a risk-free rate of 5 percent plus a credit spread of 1 percent. Credit spread is the compensation paid to investors for the risk of default in interest and principal payments. In other words, the yield of the bond comprises two components:
i) The yield on a similar default-free or government bond issue and
ii) A premium above that for the default risk associated with the bond.
The part of the risk premium attributed to default risk is called the credit spread. If the credit spread of a non-treasury bond will increase, the market price of the bond will decline. Credit spread risk can be defined as the risk wherein an issuer's debt obligation will decline due to an increase in the credit spread.
Illustrate the term structure of interest rates? The term structure of interest rates: The term to maturity affects the interest rate. Bonds along with identical risk may
Individual/Borrower Rating This includes rating a borrower to whom a loan/credit facility may be sanctioned.
Define depreciation expense as it appears on the income statement. How does depreciation affect cash flow? The term accounting depreciation is the allocation of an asset's init
Do mergers result in layoffs? Whole employment in the banking industry in fact has increased slightly over the last ten years. A few mergers do result in layoffs. Though, many ba
Q. Describes the methods of Capital Budgeting? Capital Budgeting: - Capital Budgeting is the procedure of making decisions for investment in long-term assets. It is a method of
1 Explain the difference between a forward start option and a package. Outperformance certificates are offered to investors by many European banks as a way of investing in a com
Why is it important to study international financial management? Answer: We are now living in a world in which all the main economic functions, that are production, consumption,
Functions of a Stock Exchange The stock exchange is a market place where investors trade in securities. It is a competitive market involving large numbers of buyers and sellers
Q. Computation of the cost of capital? Computation of overall cost of capital of the firm invoices Cost of debts: debt may be issued at par , at premium or discount it may
What is the difference between pro forma financial statements and a cash budget? Explain why pro forma financial statements are not used to forecast cash needs. Pro forma
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd