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Author Question: Assume that interest rates on 30-year Treasury and corporate bonds with different ratings, all of ... (Read 50 times)

Facerro

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on: Aug 7, 2023

Question 1

Assume that all interest rates in the economy decline from 12% to 11%. Which bond would have the largest percentage increase in price?

◦

a 25-year zero coupon bond


◦

a 20-year bond with a 6% coupon


◦

a 10-year bond with a 12% coupon


◦

a 7-year bond with a 16% coupon



Question 2

Assume that interest rates on 30-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows:
      
 T-bond = 8.85%A = 10.50%
 AAA = 9.31%BBB = 11.64%
      

What most probably caused the differences in rates among these issues?


◦

default risk differences


◦

real risk-free rate differences


◦

interest rate risk differences


◦

inflation differences

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by Facerro on Aug 7, 2023

rika06@comcast.net

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Facerro

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

amcvicar

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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