Question
In: Finance
Tell me the best scenario when an investor should consider the purchase of a corporate bond...
- Tell me the best scenario when an investor should consider the purchase of a corporate bond in a portfolio. Also, talk to me about how spread tightening and widening can be trading opportunities.
Solutions
Expert Solution
Corporate Bonds are an investment opportunity that can be invested with lower risk when compared to stocks.
There are several types of bonds such as fixed interest coupon bonds, zero coupon bonds, perpetual bonds etc
The interest rate of bonds depends on the capacity of companies repayment.
Generally yield on bonds are compared with government issued bonds which are risk free.
Thus spread tightening and widening concept arises in order to compare with market bond returns and specific company bond returns.It is explained in the above paper.
jeff jeffy answered 3 hours agoRelated Solutions
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The
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The
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It is currently yielding 7%.
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If I satisfied with answer, I would give upvote.
or else I would downvote
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An investor purchases one municipal bond and one corporate bond that pay rates of return of...
An investor purchases one municipal bond and one corporate bond
that pay rates of return of 5% and 6.4%, respectively. The investor
is in the 15% tax bracket. Please calculate his after-tax rates of
return on both the municipal bond and the corporate bond.
Please enter your answer with TWO decimal points.
Muni bond: %
Corp bond: %
An investor purchases one municipal bond and one corporate bond that pay rates of return of...
An investor purchases one municipal bond and one corporate bond
that pay rates of return of 6% and 7.4%, respectively. If the
investor is in the 15% tax bracket, his after-tax rates of return
on the municipal and corporate bonds would be, respectively,
_____.
Multiple Choice
6.90% and 6.29%
6% and 7.4%
6% and 6.29%
5.10% and 7.4%
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