Question

Assuming the government is selling a government bond to fight COVID-19, and at the same time, ASHANTI Goldfields Company is selling a corporate bond to increase its production. Under what conditions will the production-linked corporate bond be oversubscribed at the expense of the government bond. Explore all possible scenarios.

Answer 1

Answer :-

Since the corporate bond is over-subscribed at the expense of the government bond it tends to be because of numerous variables.

1) :- On the off chance that guess this company has discovered the solution for COVID and need money to scale production of vaccines, at that point investors will lean toward it over the government bond.

2) :- It can likewise be that the company needs to grow production of things identified with crown virus like sanitizers, gloves, covers and PPE and so forth.

3) :- In this season of emergency, the government bond yield has gone down due to investors' trip to wellbeing. Consequently, it may be that the hazard profile of the company and the relating returns related with those dangers are to such an extent that it offers a deal when contrasted with the government bond.

4) :- It can likewise be that they would have concocted another contribution which changes the customary methods of organizations.

For example individuals are reluctant to purchase things from outside and they are likewise scared of requesting things on the web.

Subsequently, in the event that they think of assume an automaton or whatever other item which permits internet business destinations to convey their items and different basics like food and so on in a manner that minimzes human contact and lessens dread in the psyches of individuals, at that point investors would incline toward it in light of the fact that the interest for such an item would be generally excellent during circumstances such as the present.