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andriy [413]
2 years ago
5

Discuss the relationship between bond prices and interest rates. What impact do changing interest rates have on the price of lon

g-term bonds versus short-term bonds? Your answer must be supported with examples and academic citations.
Business
1 answer:
Doss [256]2 years ago
5 0

Interest rates and bond prices have an adverse correlation. Bond prices grow during periods of low-interest rates and decline during periods of high-interest rates.

<h3>What is the interest rate?</h3>

The cost of borrowing and the rewards for saving are both indicated by the interest rate. Since there is a premium if the coupon rate is higher than the market rate, the bond's price will be higher. Bond prices will decrease if the coupon rate is lower because there will be a discount.

The price of long-term bonds is more affected by interest rates than the price of short-term bonds. A bond's price varies depending on how long it is.

Learn more about bond prices, here:

brainly.com/question/15518377

#SPJ1

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Your birthday is next week and instead of other presents, your parents promised to give you $2,200 in cash. Since you have a par
vfiekz [6]

Answer:

Interest revenue from the CD 470.04

Explanation:

we will calcualte the future value of the CD and from there calculate the interest:

Principal \: (1+ r)^{time} = Amount

Principal 2,200.00

time 8.00 (2 years x 4 quarter per year)

rate 0.02450 (9.8% divided by 4 quarter per year)

This divisions and multiplication are done to make time and rate be express i nthe same metric.

2200 \: (1+ 0.0245)^{8} = Amount

Amount 2,670.04

Now, we calculate interest revenue:

Amount - Principal

2,670.04 - 2,200 = 470.04

3 0
3 years ago
The total dollar value of all goods and services produced by all people within the boundaries of a country during a specified ti
kvasek [131]

Answer:

The gross domestic product

Explanation:

The gross domestic product = Consumption spending + Investment + Government Spending + Net Export

8 0
3 years ago
You own the following portfolio of stocks. What is the portfolio weight of Stock C?
LuckyWell [14K]

Answer:

38?59%

Explanation:

Calculation for the portfolio weight of Stock C

First step is to calculate the Total Value of Stock A to Stock D in the Portfolio using this formula

Total Value of stock A to stock D in Portfolio = Number of Shares * Stock Price

Let plug in the formula

Total Value of stock A to stock D in Portfolio = (A 120 *$32)+ (B 750* $28)+ (C 450* $52) +(D 240* $51)

Total Value of stock A to stock D in Portfolio = A $3,840+ B$21,000+C$23,400+D$12,240

Total Value of stock A to stock D in Portfolio=$60,480

Last step is to calculate the portfolio weight of Stock C using this formula

Portfolio weight of Stock C =Stock C /Total Value of stock A to stock D in Portfolio

Let plug in the formula

Portfolio weight of Stock C= 450 *$52/$60,480

Portfolio weight of Stock C=$23,400/$60,480

Portfolio weight of Stock C=0.3869*100

Portfolio weight of Stock C=38.69%

Therefore the Portfolio weight of Stock C will be 38.69%

7 0
3 years ago
How do investment banks differ from commercial? banks? ?(mark all that? apply.)?
jenyasd209 [6]
Investment banks help companies to purchase, sell and make investments using bonds while commercial banks are concerned on managing deposits on both savings and checking account.

Investment banks aid companies on bringing their investments on public offers; commercial banks are focused on providing security for the clienteles money.

Investment banks have some degree of freedom in choosing their own strategies while commercial banks have more risks because they are open to public transactions. 
4 0
3 years ago
Even though many bonds have deferred sinking funds, the sinking fund has the following effects on bondholders: I) provides extra
Vladimir [108]

Answer: I) provides extra protection to bondholders as both an early warning system and perhaps some collateral cash

II) ) provides an option to the firm to buy bonds at the lower of market or face value.

Explanation:

A sinking fund is typically an amount of money that is being set aside by a company in order to either pay a bind or pay off a particular debt that the company has incurred.

The effect of the sinking bond on bondholders is that it provides extra protection to bondholders as both an early warning system and perhaps some collateral cash and tabt is also provides an option to the firm to buy bonds at the lower of market or face value.

Therefore, option I and II are correct.

3 0
2 years ago
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