Financial Management: Theory & Practice (16th Edition)

Chapter 5

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A bond is a fixed income instrument which ... more

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The main four types of bonds are: 1. Treasury ... more

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The U.S. Treasury bonds have some risk because of ... more

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Foreign bonds are exposed to the following types ... more

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Floating-rate bonds are the bonds that have a ... more

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When there is a decline in the interest rates, the... more

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A sinking fund can be handled in following two ... more

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The securities that provide for a sinking fund are... more

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An income bond is a type of bond in which only the... more

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Convertible bonds and bonds with warrants have ... more

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The prices of fixed-rate bonds fall if ... more

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A discount bond is a bond which is issued at a ... more

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$955.14 ; Determine the price of the bond using ... more

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$1,301.77 ; Compute the annual coupon payment by ... more

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New issue refers to the securities that are ... more

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Price of the bond:At 6% going interest rate = $1,... more

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Chief cells are part of the gastric gland that ... more

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$1,257.30 ; Compute the semiannual coupon payment ... more

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The yield to maturity is the rate of interest that... more

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The current yield means the amount of cash income ... more

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The current yield can exceed the total return when... more

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Yield to maturity = 10.90%Current yield = 9.41% ; ... more

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YTM = 8.57%YTC = 6.85% The bond will not be called... more

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The equation for the nominal interest rate on any ... more

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Treasury bills rate gives a correct estimate of ... more

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Treasury bonds rate gives a correct estimate of ... more

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Treasury inflation-protected securities rate gives... more

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Treasury inflation-protected securities (TIPS) are... more

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2% ; Compute the inflation premium by deducting ... more

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The interest rate risk is the risk which arises ... more

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The long-term bondholders are exposed to the ... more

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7.5% ; Compute the yield on a 20-year T-bond by ... more

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A mortgage bond is a secured bond and it provides ... more

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The three major rating agencies are:1. Moody's ... more

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Bond spread means the difference between a bond's ... more

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A bond's rating is an indicator of its default ... more

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1.5% ; Compute the default risk premium by ... more

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A bond issued by a small company will have a ... more

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A yield curve is a line which represents interest ... more

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A normal yield curve is a curve in which long-term... more

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It is a normal yield curve if the interest rates ... more

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A junk bond is a debt security that has been given... more

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In the case of liquidation, the assets of the ... more

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The liquidated firm's assets are used to settle ... more

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Interest rates on the long-term bonds are more ... more

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The bond prices will fall and the yield to ... more

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The value of the callable bonds will not rise as ... more

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From the firm’s point of view, the annual ... more

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$928.39 ; Compute the annual coupon payment by ... more

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12.48% ; Compute the annual coupon payment by ... more

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8.55% ; Compute the annual coupon payment by ... more

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Yield on 2-year treasury securities = 7%Yield on 3... more

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2.5% ; Derive the equation of the yield on ... more

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0.3% ; Compute the maturity risk premium (MRP) on ... more

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$1,085.80 ; Compute the semiannual coupon payment ... more

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Yield to Maturity = 6.62%Yield to Call = 6.48% ; ... more

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14.82% ; Compute the annual coupon payment by ... more

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8.65% ; Compute the annual coupon payment by ... more

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10.78% ; Determine the semiannual coupon payment ... more

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6.48% ; Global Explanation: The bond is currently ... more

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The table is as follows: ; Compute the annual ... more

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Compute the annual coupon payment by multiplying ... more

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5.8% ; Compute the average inflation premium (IP) ... more

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1.5% ; Compute the average inflation premium (IP2... more

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6% ; Compute the yield on 1-year treasury notes by... more

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The characteristics of a bond include the face ... more

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A call provision is a clause in the bond agreement... more

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If the value of an asset is based on the expected ... more

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The value of the bond is determined by discounting... more

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The annual bond valuation formula would be changed... more

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The yield on debt securities is the ratio of ... more

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Real risk-free interest rate (r*) is defined as ... more

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The inflation premium (IP) can be determined as ... more

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Bond spread means the difference between a bond’s ... more

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Interest rate (or price) risk means the risk that ... more

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Reinvestment rate risk means the risk of an income... more

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Short-term bonds are more exposed to the ... more

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The term structure of interest rates is defined as... more

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The bankruptcy law says that in the case of ... more

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