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Bonds are usually recognized by yields, which change from time to time owing to many market forces. There exists an inverse relationship between the bond price and the interest rates. When the interest rates rise, the bond's price decline; and when interest rates decrease, the bond's price increase. As the price of the bond fluctuates with market interest rates, an investor is exposed to a risk because the price of a bond held in his portfolio will decline if market interest rates rise. This risk is called interest rate risk.
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mention the advantages and disadvantages of the traditional approach
Demerits of Pay Back Method:- (i) It ignores the Cash Flows after the Pay Back Period: - The main shortcoming of this method is that it completely ignores all cash inflows subs
Explain the bird in the hand theory of cash dividends. The bird in the hand dividends theory state that dividends received now are better than a promise of future dividends. U
• Prepare a Trend Analysis for the Balance Sheet, Income Statement and Cash Flow Statement • This should include about 12 accounts in the Balance Sheet and about 10 Income Statemen
How to get cost differential when 100% done by a single party only.
Profitability Index (PI) : It is a ratio of the present value of the total cash benefits to the present value of the net cash outlay. The higher the PI, the higher the return.
what is the annual tax shield to a firm that has total assets of $80 million and a net worth of $55 million,if the average interest rate on debt is 8.5% and the marginal tax rate i
Techiniques of capm Effects of capm
What are some instances of restrictive covenants that might be fixed in a bond's indenture? An indenture might involve limitations on future borrowings, restrictions on dividen
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