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Author Question: Short Corp. just issued bonds that will mature in 15 years, and Long Corp. issued bonds that will ... (Read 88 times)

mustachegiraffe

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on: Aug 7, 2023
Short Corp. just issued bonds that will mature in 15 years, and Long Corp. issued bonds that will mature in 30 years. Both bonds promise to pay an annual coupon, they are not callable or convertible, and they are equally liquid. Further, assume that the yield curve is based only on expectations about future inflation; that is, that the maturity risk premium is zero for government bonds. Under these conditions, which of the following statements is correct?

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If the yield curve is upward sloping, Short’s bonds must have the lower yield under all conditions.


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If the yield curve is downward sloping, Short’s bonds must have the higher yield under all conditions.


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If the yield curve is upward sloping and Short has higherdefault risk than Long, then Long’s bonds must have the higher yield under all conditions.


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If the yield curve is upward sloping and Short has less default risk than Long, then Long’s bonds must have the higher yield under all conditions.

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

JulianneMu

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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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mustachegiraffe

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review

TheDev123

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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