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1 year ago

Which bond portfolio where all investment is made up front would be most negatively affected by a sharp rise in interest rates?

Business

1 answer:

N76 [4]1 year ago

6 0

Option C. barbell

By definition, money market products are liquid. Each buyer knows that they will be paid when they mature in the near future, so they are easily traded at a discount that matches the market rate.

When interest rates rise, bond prices fall (and vice versa), and long-term bonds are the most sensitive to changes in interest rates. This is because longer-term bonds have longer durations than shorter-term bonds that are nearing maturity with fewer coupon payments.

Special considerations. Series I bonds are considered low risk as they are backed by the full trust and credit of the U.S. government and do not depreciate in redemption value. However, that security comes with a low yield comparable to high-yield savings accounts and certificates of deposit (CDs).

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On December 31, 2021, Interlink Communications issued 6% stated rate bonds with a face amount of $100 million. The bonds mature

Sauron [17]

Answer:

The bonds were issued at $87,590,959

Explanation:

The bonds will be issued at the present value of the coupon and maturity discounted by the market rate

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 6,000,000.000 ( 100 million x 6%)

time 30 (2051 - 2021)

market rate 7% = 7/100 = 0.07

$6000000 \times \frac{1-(1+0.07)^{-30} }{0.07} = PV\\$

PV $74,454,247.1010

PV of the maturity

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 100,000,000.00

time 30.00

rate 0.07

$\frac{100000000}{(1 + 0.07)^{30} } = PV$

PV 13,136,711.72

Total current value of the bonds:

PV coupon $ 74,454,247.1010

PV maturity $ 13,136, 711.7155

Total $87,590,958.8165

8 0

3 years ago

Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premi

Tju [1.3M]

The main reason for the success of the Beats Electronics is: B. it created a perception that owning its products was cool.

Explanation:

Beats Electronics was able to outperform in the premium headphone market. They were able to out-stand from their competitive companies like JBL, Bose, Audio-Technica, Skullcandy and Sennheiser.

Beats Electronics made their customers to believe that owning their product is cool. They created a perception to the customers which made them to lead in the market.

Perception refers to the way the information is conveyed to others. Beat Electronics followed this strategy and made their customers to feel that owning their product is cool.

5 0

3 years ago

Heritage, inc., had a cost of goods sold of $45,821. At the end of the year, the accounts payable balance was $8,773. How long o

Aliun [14]

Calculation of Days Payable Outstanding:

Days Payable Outstanding can be calculated using the following formula:

Days Payable Outstanding = (Accounts

Payable *365) / Cost of Goods Sold

= (8,773*365)/45,821

= 69.88

Hence, Days Payable Outstanding is 69.88 days. We can say that it takes on average 69.88 days to the company to pay off its suppliers during the year.

3 0

3 years ago

4. Savings are particularly important to young people because:

katen-ka-za [31]

Answer:

I think it's D

Explanation:

because savings are in the beginning of their financial lives,”

I hope this helped u :)

3 0

2 years ago

Conventional wisdom says one should measure a manager's investment performance over an entire market cycle. What arguments suppo

White raven [17]

Answer:

In every form of analysis, it is always safer to take a macro or holistic view of the situation. This is true for the investment performance of a manager. One investment decision that went right does not suffice to classify an investment portfolio manager as proficient, neither is one that went south enough to tag him deficient.

The forecasting ability of managers, on the balance of probability, will vary for different cases, with a helicopter view of providing a more accurate measure of their performance.

However, if it was possible to analyse the market for volatility and adjust our forecasts it becomes unnecessary to look at and analyse all the information from a 12-month cycle before coming to terms about the performance of the manager.

Cheers!

4 0

3 years ago