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enot [183]
4 years ago
8

Bonds are considered to offer a guaranteed return, as they must be honored by law, but which is still a potential risk that inve

stors face?
Business
2 answers:
bearhunter [10]4 years ago
9 0

<u>The issuer could go bankrupt is the potential risk that investors face. </u>

Further Explanation:

Bond:  

The bond is a long-term debt which the company promises to pay with interest to their bondholders.  

  • The issuer raise capital according to their need and want, they mostly do invest the money. So, this is not a potential risk faced by investors.
  • The bondholders get interest for the investment in the bonds of the company, only the stockholders get the dividend payment by the company or the issuer.
  • This is the only situation where the bondholder may face risk when the company or the issuer goes bankrupt, the issuer may not be able to pay the interest to its bondholders. Therefore, this is a potential risk faced by investors.
  • If the issuer may not make a profit then also the issuer has to pay the interest to its bondholders whether he makes profit or not. It cannot be regarded as potential risk to investors.

Learn More:

1. Stock and bonds  

<u>brainly.com/question/1330190 </u>

<u> </u>

2. Stock price  

<u>brainly.com/question/11192535 </u>

3. Stock portfolio  

<u>brainly.com/question/5728646 </u>

Answer Details:

Grade: High school

Chapter: Stocks and bonds

Subject: Business studies

Keywords:

Bonds are considered to offer a guaranteed return, as they must be honored by law, but which is still a potential risk that investors face.

andrew11 [14]4 years ago
7 0
The potential risk that the investors may face when this is made use is that the issuer may not be able to make profit when the bonds are considered to offer as a guaranteed return because they are honored by law and with that, this will cause the value of the bond to be lowered when exposed in the market in which the return will also be lower when return to the investors. 
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Piedmont Hotels is an all-equity company. Its stock has a beta of .82. The market risk premium is 6.9 percent and the risk-free
katrin2010 [14]

Answer:

11.86%

Explanation:

Piedmont hotels can be described as an all-equity company

Its stock has a beta of 0.82

The market risk premium is 6.9%

The risk free rate is 4.5%

The adjustment is 1.7%

Therefore, the required rate of return can be calculated as follows

Required rate of return= Risk free rate of return + ( beta×market risk premium) + adjustment

= 4.5% + (0.82×6.9%) + 1.7%

= 4.5% + 5.658 + 1.7%

= 11.86%

Hence the required rate of return for the project is 11.86%

7 0
3 years ago
"A customer buys a Brokered CD for $100,000. Upon receipt of his next account statement, the customer sees that the market value
Dmitry_Shevchenko [17]

Answer:

market rates have increased

Explanation:

Bonds as well as brokered CDs are priced depending on the market's interest rates for similar investments. For example, the CD pays a 3% interest, and then the market rate increases to 3.1% (or more), the CD's price will decrease. On the other hand, if the market rates decrease to 2.9% (or less), the CD's price will increase.

8 0
3 years ago
Lyn files a suit against Karl. Karl denies Lyn’s charges and sets forth his ownclaim that Lyn breached their contract and owes K
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Answer:

a. Counterclaim

Explanation:

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Lyn is the plaintiff, who first sued Karl (the defendant). Karl's claim against the original plaintiff (Lyn) is an example of a counterclaim.

Another example is counterclaim by the city of Sandy Springs against Holder Construction Group, the company that built the city of Sandy Springs’ new City Springs complex.

Holder Construction Group earlier sued Sandy Springs city over disagreements on payments for the work.

The city filed a counterclaim to a superior Court, claiming that Holder Group should be denied payments until all work is done and for breach of contract, negligent construction and fraud.

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In year 1 the price level is constant and the nominal rate of interest is 6 percent. But in year 2 the inflation rate is 3 perce
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The nominal interest rate will rise by 3%.

Nominal interest rate is the sum of real interest rate and inflation rate. Real interest rate is interest rate that has been adjusted for inflation. Inflation is the persistent rise in general price levels.

Nominal interest rate in year 2 = real interest rate + inflation rate

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To learn more, please check: brainly.com/question/21323568

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