Chapter 7 INTEREST LEVELS And Bond Valuation (Continue)

Learning Objective: 07-01 Important bond features and types of bonds. Mary is a retired widow who is dependent upon the eye income produced by her connection collection financially. Which one of the following bonds is the least ideal for her to possess? Learning Objective: 07-01 Important connection features and types of bonds.

Al is retired and loves his lifestyle. His one concern is that his bonds provide a steady blast of income that will continue to allow him to really have the money he really wants to continue his energetic lifestyle without reducing his present quality lifestyle. Although he has sufficient principal to go on, he only wants to spend the interest income provided by his holdings and therefore can be involved about the purchasing power of that income.

Which one of the next bonds should best convenience Al’s concerns? Learning Objective: 07-01 Important connection features and types of bonds. Phil has researched TLM Technologies and thinks the firm is poised to greatly upsurge in value. He wants to invest in this ongoing company. Phil has decided to purchase TLM Technologies bonds so that he can have a steady stream of interest income.

However, he still wishes that he could discuss in the firm’s success along with TLM’s shareholders. Which one of the next bond features will help Phil fulfill his wish? Learning Objective: 07-01 Important bond features and types of bonds. 11 percent more than the par value. 100.11 percent of face value.

100 and 11/32nds percent of face value. Learning Objective: 07-01 Important connection features and types of bonds. Which of the following properly describe U.S. Learning Objective: 07-01 Important connection features and types of bonds. 1,000 face value connections issued by Taylor Tools pays interest semiannually on February 1 and August 1. Today is Oct 1 Assume. Exactly what will the difference, if any, be between this bond’s clean and dirty prices today?

Learning Objective: 07-02-Bond values and yields and why they fluctuate. Today, June 15, you need it in a relationship with a quoted price of 98.64. On January 1 and July 1 The bond will pay interest. Which of the following prices represents your total cost of buying this bond today?

  1. 343 Baker Hughes Incorporated (NYSE:BHI) -61.9% 30.89 81.10
  2. You have to pick the ETFs you want yourself. Thankfully the selection continues to be fairly small
  3. Ten Essential Business Analytics
  4. Should I take my pension as a lump amount or lifetime obligations
  5. A transfer in the management of the close-ended scheme does not require the consent of

Learning Objective: 07-02-Bond values and yields and just why they fluctuate. Which of the next rates represents the change, if any, in your purchasing power as a result of owning a bond? Learning Objective: 07-04 The impact of inflation on interest levels. Which one of the next statements is right?

The risk-free rate represents the change in purchasing power. Any come back higher than the inflation rate symbolizes the risk premium. Historical real rates have comeback must maintain positivity. Nominal rates go beyond real rates by the quantity of the risk-free rate. The real rate must be less than the nominal rate given an optimistic rate of inflation. Learning Objective: 07-05 The term structure of interest rates and the determinants of bond yields.

Learning Objective: 07-04 The impact of inflation on interest rates. You want to compare today’s values of two different channels of cash moves which have equal risks. One stream is indicated in nominal values and the other stream is expressed in real beliefs. You choose to discount the nominal cash moves using a nominal annual rate of 8 percent.

What rate should you use to discount the real cash flows? You are unable to compare the present values of these two channels of cash moves. Learning Objective: 07-04 The impact of inflation on interest levels. Which of the following statements is correct concerning the term structure of interest levels? I. Expectations of lower inflation rates in the future have a tendency to lower the slope of the term structure of interest rates.