Which statement istrue:Group of answer choicesLong-term bonds are riskier, compared to short-term bonds,...

Which statement is true:

Group of answer choices

Long-term bonds are riskier, compared to short-term bonds, because they are more sensitive to interest rate changes.

Short-term bonds are riskier, compared to long-term bonds, because they are more sensitive to interest rate changes.

Coupon bonds are riskers, compared to zero-coupon bonds, because investors will only receive coupons if the issuer defaults.

Zero-coupon bonds are usually premium bonds.

Expert Solution

Ans- Option 1. Long-term bonds are riskier, compared to short-term bonds, because they are more sensitive to interest rate changes.

- Long-term Bonds and low Coupon rate(or Zero-coupon) Bonds are more risker than Short term Bond and high coupon bonds because they are more sensitive to Market Interest rates.

When Market Interest rate chnages the impact of chnage in Price is higher in there cases.

Zero-coupon bonds are usually Discount bonds.

jeff jeffy answered 2 years ago

11. Which of the following is a correct statement? A. The objective of short-term financial management...

11. Which of the following is a correct statement? A. The objective of short-term financial management is to maximize carrying costs. B. Managing short-term cash flows involves minimizing liquidity. C. In managing short-term finances, a financial manager should seek the optimal level of investment in fixed assets. D. A financial manager should use a cash budget to identify short-term financial needs. E. In an ideal economy, the optimal level of net working capital is positive. 12. A firm needs to...

Analyze the risk profiles of short-term bonds and long-term bonds during economic instability and fluctuating interest...

Analyze the risk profiles of short-term bonds and long-term bonds during economic instability and fluctuating interest rates. This is from the book financial markets and instituons global edition 9th edition by mishkin.

Primary market sales of bonds (short answer )

Discuss the conditions under which investors would prefer to hold short-term bonds and when they would...

Discuss the conditions under which investors would prefer to hold short-term bonds and when they would prefer to hold long-term bonds. Find an Internet site that explains duration and how investors should utilize it in determining the appropriate bond investing strategy, given current interest rates and interest rate expectations. Provide a link for your classmates.

Answer one of the two questions please Investments can be long-term or short-term. If you are...

Answer one of the two questions please Investments can be long-term or short-term. If you are investing for the long term, how much do you think general news stories, news about the economy, and company-specific news stories should affect your investment choices? Explain your answer. Investors are often grouped into two categories, those investors who invest based on specific company information, known as “fundamental investors,” and those who pay more attention to market movements and factors based on general market...

Which of the following is NOT true? Group of answer choices Compared to this year, a...

Which of the following is NOT true? Group of answer choices Compared to this year, a discount bond’s price will increase next year, everything else equal. Compared to this year, a premium bond’s price will decrease next year, everything else equal. Compared to this year, a par bond’s price will remain constant next year, everything else equal. Compared to this year, a premium bond’s price will increase next year, everything else equal.

14. Suppose that short- term municipal bonds currently offer yields of 4%, while comparable taxable bonds...

14. Suppose that short- term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Which gives you the higher after- tax yield if your tax bracket is: ( LO 2- 1) a. Zero b. 10% c. 20% d. 30% 19. Consider the three stocks in the following table. Pt represents price at time t, and Q t represents shares outstanding at time t. Stock C splits two- for- one in the last period. ( LO 2-...

Accompanying the bank statement was a credit memo for a short-term note collected by the bank...

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts? debit Notes Receivable; credit Cash debit Cash; credit Miscellaneous Income debit Cash; credit Notes Receivable and Interest Revenue debit Accounts Receivable; credit Cash

1. Accompanying the bank statement was a credit memo for a short-term note collected by the...

1. Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts? a.debit Cash; credit Notes Receivable and Interest Revenue b.debit Notes Receivable; credit Cash c.debit Accounts Receivable; credit Cash d.debit Cash; credit Miscellaneous Income 2. Use the information below to answer the following question. The following lots of a particular commodity were available for sale during the year: Beginning inventory 10 units at...

Which is INCORRECT regarding corporate bonds? A. Corporate bonds typically have higher yields compared to treasury...

Which is INCORRECT regarding corporate bonds? A. Corporate bonds typically have higher yields compared to treasury bonds with the same maturity. B. The majority of corporate bonds are callable, especially the high yield ones. C. Corporate bonds are traded on the dealers market, and are generally less liquid than stocks. D. The higher the credit rating, the higher the credit spread.

Question