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zvonat [6]
3 years ago
8

Which of the following statements is most correct? a. All else equal, if a bond’s yield to maturity increases, its price will fa

ll. b. All else equal, if a bond is down graded by the rating agencies its yield to maturity will increase. c. If a firm has two bond issues that are identical except one is subordinate to the other, the subordinate issue will have a higher yield to maturity than the other issue. d. A B and C are correct. e. None of the above are correct
Business
1 answer:
Andrei [34K]3 years ago
4 0

Answer: d. A B and C are correct.

Explanation:

A bond's price and it's Yield to Maturity (YTM) are inversely related such that when Yield to Maturity rises, the price of the bond falls. This is a because a higher YTM signifies that the bond is riskier so it will compensate by being cheaper.

If a bond is downgraded by Ratings agencies then it means that the bond is now riskier. As it is riskier investors will charge more interest for taking on the risk. The interest is the YTM and so it rises.

A Subordinate bond means that if the company were to go into bankruptcy for instance, the Subordinate bond would only be paid for after the bond that is not Subordinated. This means that there is a chance that Subordinate bond holders will not get anything from the liquidation of the company. Investors will therefore charge a higher YTM to cater for the risk that this happens.

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A stock has a beta of 1.16, the expected return on the market is 12 percent, and the risk-free rate is 3.5 percent. What must th
Anika [276]

Answer:

13.36%

Explanation:

R = Rf + B(Rm - Rf)

where,

Rf= risk free return

B= beta

Rm= Market rate of return

Rm-Rf= Risk premium

4 0
2 years ago
Assessing the communication forms and orientations of coworkers and assessing their sources of identity is an example of which p
Lostsunrise [7]

Answer:

Attending

Explanation:

There are four steps in the risk negotiation cycle that includes attending, sensemaking, transforming and maintaining.

While assessing and analyzing the forms of communication and the workers orientations with respect to identify the sources reflects the attending phase whether the employees attend the orientations and according to that the analyzed could be done

Therefore this is an attending phase  

6 0
3 years ago
Oliver has $5000 in a savings account, has $8000 invested in the stock
icang [17]

Answer:$8400

Explanation:

Just took the test

5 0
3 years ago
Mark accidentally overheard a confidential phone conversation between his boss and the district manager during which they discus
EleoNora [17]

Answer:

-Say nothing to his co-workers since this was a private conversation and he could lose his job if his boss found out he was spreading sensitive company information

Explanation:

Since in the situation it is mentioned that Mark accidentally heard a confidential phone conversation in which the possibility of layoff in the sales division would be discussed he is not in danger but some of his friends are the sales representatives so mark would not tell anyone as it is a private conversation and he could lose the job if the boss knows that the information is spread by mark

Therefore the second option is correct

5 0
3 years ago
Journalize the following transactions for the Evans Company. Assume the company uses a perpetual inventory system.
marta [7]

Answer:

Evans Company

General Journal

Part a.

Debit : Cash $645

Debit : Cost of goods sold $375

Credit : Sales Revenue $645

Credit : Merchandise $375

Part b.

Debit : Cash $432

Debit : Cost of goods sold $195

Credit : Sales Revenue $432

Credit : Merchandise $195

Part c.

Debit : Accounts Receivable $670

Debit : Cost of goods sold $438

Credit : Sales Revenue $670

Credit : Merchandise $438

Part d.

Debit : Credit Card fees $85

Credit : Cash $85

Explanation:

The Perpetual inventory system calculates the cost of sale and inventory balance on each and every sale made hence the journals above.

4 0
3 years ago
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