1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Greeley [361]
3 years ago
8

You are considering two bonds. Bond A has a 9% annual coupon while Bond B has a 6% annual coupon. Both bonds have a 7% yield to

maturity, and the YTM is expected to remain constant. Which of the following statements is CORRECT? a. The price of Bond B will decrease over time, but the price of Bond A will increase over time. b. The prices of both bonds will remain unchanged. c. The price of Bond A will decrease over time, but the price of Bond B will increase over time. d. The prices of both bonds will increase by 7% per year. e. The prices of both bonds will increase over time, but the price of Bond A will increase at a faster rate.
Business
1 answer:
Yuri [45]3 years ago
4 0

Answer:

c. The price of Bond A will decrease over time, but the price of Bond B will increase over time

Explanation:

Bond A has a higher coupon rate than market thus, investor will accept to purchase the bond for a higher price until the YTM of this bond equals the market rate

Bond B is the opposite, is paying lower thus, will we purchase for less.

As times passes both will get their market value closer to the face value of the bond because, at maturity the bond will pay 1,000.

Making Bond A lower his price while B increases.

You might be interested in
The general message of the full disclosure principle is that: a. information is symmetric. b. information is costly to fake. c.
erica [24]

Based on financial and accounting principles, the general message of the full disclosure principle is that "<u>the lack of evidence that something resides in a favored category will often suggest that it belongs to a less favored one."</u>

This is because the full disclosure principle state that all information should be documented in a company or individual financial statements which are believed to affect a reader's knowledge of that specific financial statement.

This ensures that every party that needs to access the financial statements under concern should fully understand them without missing any form of information.

Otherwise, any missing link or information will be ruled in favor of the less favored party in a legal situation.

Hence, in this case, it is concluded that the correct answer is option D.

Learn more here: brainly.com/question/24280368

6 0
3 years ago
The __________ market consists of individuals and organizations that want goods and services in order to produce goods and servi
Vlad1618 [11]
The correct answer is the consumer market
5 0
3 years ago
Read 2 more answers
Suppose that your firm has spent several decades establishing a well-known brand name through advertising. If other firms are pr
-Dominant- [34]
Location because it was spent on most and the decades were filled with them
4 0
3 years ago
Consider a single factor APT. Portfolio A has a beta of 2.0 and an expected return of 19%. Portfolio B has a beta of 1.0 and an
Aleksandr-060686 [28]

Answer:

Invest 50% in portfolio A and the rest 50% in risk-free asset to create Portfolio D, we will have the same systematic risk as that of Portfolio B.

The expected return of Portfolio D = 11%

Portfolio D and Portfolio B have the same beta of 1.0. But, portfolio D has a higher return of 11% as compared to the expected return of Portfolio B of 8%.

Buy Portfolio D, and sell Portfolio B.

Explanation:

A risk free asset is referred to an asset that provides a virtually guaranteed return and no possibility of loss.

Risk-free asset has a beta of 0.

Portfolio D Beta = Wa × Portfolio A Beta + Wb × Risk-free asset beta

1.0 = Wa * 2.0 + Wb * 0

Wa = 1.0/2.0

Wa = 0.50

If we invest 50% in portfolio A and the rest 50% in risk-free asset to create Portfolio D, we will have the same systematic risk as that of Portfolio B.

The expected return of Portfolio D = 0.50 × 0.19 + 0.50 ×0.03

The expected return of Portfolio D = 0.11

The expected return of Portfolio D = 11%

Portfolio D and Portfolio B have the same beta of 1.0. But, portfolio D has a higher return of 11% as compared to the expected return of Portfolio B of 8%.

Buy Portfolio D, and sell Portfolio B.

7 0
3 years ago
Which of the following is true about the ethics line
Arturiano [62]

Answer: All of the above

Explanation:

The options include:

a. It's available 24 hours a day, 7 days a week.

b. All reports are handled in a highly confidential manner.

c. You do not have to identify yourself on the call.

d. All of the above.

An ethics line refers to the anonymous on-line system which can be used by an employee to report bad behavior or something unethical or illegal.

Ethics line are typically available 24 hours a day, 7 days a week and reports made are confidential. Therefore, the correct option is "All of the above".

8 0
2 years ago
Other questions:
  • If Vera buys 1/2 of of a kilogram of nuts,how much will she spend?
    12·1 answer
  • A weaker dollar benefits ---------- and hurts-----------
    5·1 answer
  • Capital market securities include all of the following EXCEPT:
    8·1 answer
  • A firm currently produces 3,500 units of output per week. After an additional worker is hired, output rises to 3,750 units per w
    9·1 answer
  • Capri Realty is the exclusive representative of Verde Ridge subdivision. Capri sales staff will temporarily work out of a model
    12·1 answer
  • The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its ass
    9·1 answer
  • Princess Cruise Company (PCC) purchased a ship from Mitsubishi Heavy Industry. PCC owes Mitsubishi Heavy Industry 500 million ye
    14·1 answer
  • Denver Systems has total assets of $1,000,000; common equity of $400,000; a gross profit of $800,000; total operating expenses o
    6·1 answer
  • Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $7,400 cash and
    12·1 answer
  • Assume a project will increase inventory by $61,000, accounts payable by $28,000, and accounts receivable by $36,000. what is th
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!