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solong [7]
3 years ago
7

Two 20-year corporate bonds are issued at par, with stated interest rates of 10%. One issue is puttable at par in 5 years, while

the other is puttable at par in 10 years. If interest rates rise by 200 basis points shortly after issuance, which statement is TRUE?
a. The bond puttable in 5 years will depreciate more than the bond puttable in 10 years
b. The bond puttable in 10 years will depreciate more than the bond puttable in 5 years
c. Both bonds will depreciate by equal amounts
d. The rate of depreciation depends on the credit rating of the bonds
Business
1 answer:
True [87]3 years ago
8 0

Answer:

b. The bond puttable in 10 years will depreciate more than the bond puttable in 5 years

Explanation:

Data provided in the question

20 -year corporate bond i.e issued at par at 10%

One issue is for 5 years

other issue is for 10 years

Now if the interest rate rise by 200 basis points

So,

Based on the above information

If a bond is issued at a future date, any price drop due to higher interest rates will be eliminated as the holder is able to return the bond to the issuer earlier

Hence, the option B is correct

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Explanation:

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Utilities : This is equally important.

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3 years ago
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Answer: C. As reporting for an integral part of an annual period.

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4 years ago
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the relationship between the factors of production used by a firm and the maximum output possible is called the
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The amounts of various inputs used determine the amount of output according to a relationship known as the production function. The relationship between the inputs a firm uses and the maximum output it can produce with those inputs is called the firm's production function. Factors of production are outputs or inputs used to produce goods and services. They are the resources a business needs to make a profit by producing goods and services. Factors of production fall into four categories: Land, Labor, Capital, Entrepreneurship.

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