Give a brief answer to these questions. 1) Discuss how bonds can assist an investor to...

Give a brief answer to these questions.

1) Discuss how bonds can assist an investor to accomplish a variety of investment goals.

2) List the types of risks inherent in investing in bonds.

Expert Solution

Bonds are debt securities in which the issue of the bond makes a promise to make periodic payments and also promises to repay the principal value at maturity. An investor receive fixed payments if we invest in a bond. An investor can also fulfill his goal of capital appreciation since bonds result in capital gains depending on changes in the market interest rates. Bonds also provide diversification benefits to an investor and reduce the overall volatility of an investor's portfolio.

The risks of investing in bonds are as follows.

1. Interest rate risk. The price of a bond Falls when the interest rates increase and vice versa.

2. Inflation risk. Since the income received from a bond is fixed there is a risk that the return on the bond is unable to keep pace with inflation. The principal received on maturity would be worthless in the present value in that scenario.

3. Market risk. Investing in a bond careers market risk which refers to the risk that the entire bond market declines.

4. Default risk. This is the risk to an investor that the issue of the bond may default in payment.

jeff jeffy answered 2 years ago

Please give a careful but brief answer to each of the following questions. (a) What is...

Please give a careful but brief answer to each of the following questions. (a) What is a population? A population is the complete set of measurements from every individual of interest. A population is a subset of the complete set of measurements from every individual of interest. A population is a numerical descriptive measure of the complete set of measurements from every individual of interest. A population is a numerical descriptive measure of a subset of the complete set of...

1. An investor needs to choose between three bonds. The first bond will give the investor...

1. An investor needs to choose between three bonds. The first bond will give the investor five equal payments of P1, paid monthly and beginning in one month. The second bond will give the investor three equal payments of P2, paid every second month and beginning now. The third bond is a coupon bond with face value F, coupon rate c per month, maturity in five months, and monthly payments beginning in one month. The return over a one month...

Give a brief answer to each of the following four (4) questions: (a) (2 marks) Explain...

Give a brief answer to each of the following four (4) questions: (a) Explain the difference between a Type 1 and a Type II error. (b) If you want to reduce the margin of error of an estimate of a mean, what are the two things can you do? (c) Explain the difference between an independent samples t-test and paired t-test. (d) State and explain the Central Limit Theorem (CLT) for the sample mean when the population distribution is (i)...

Answer questions 1-3 with a brief explanation This region of the brain that is responsible for...

Answer questions 1-3 with a brief explanation This region of the brain that is responsible for the contribution of somatic motor movements, which regulates balance in movements. Thalamus Cerebrum Amygdala Cerebellum Mark was taken to the ER due to a lack in feeling of pain and temperature sensations around his body. It was discovered that part of his spinal tract, connecting the spine and thalamus, was severed. Which tract was likely severed, causing his lack in above sensations? Anterior Spinothalamic...

Management and Organizations 1. In a brief essay, discuss how managers can use rewards to shape...

Management and Organizations 1. In a brief essay, discuss how managers can use rewards to shape team behavior 2. in a short essay explain how managers can shape behavior using positive and negative reinforcement

answer the questions 1 – What is/are materialit(ies) of the digital? Discuss how materiality of the...

answer the questions 1 – What is/are materialit(ies) of the digital? Discuss how materiality of the digital informs current debates on the Internet. 2 - What are the examples of ‘gendered technologies?’ How do digital technologies confirm conventional gender norms? (Refer to O’Riordan’s article among possible others) 3 – What is the Internet of Things? Discuss its positive and negative implications. In your discussion, refer to the issues of the future of jobs, network security and human agency. 4 -...

Discuss how financial data prepared on the basis of variable costing can assist management in the...

Discuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies. With references if possible.

How can financial statement analysis be used to assist management in their evaluation? Discuss the different...

How can financial statement analysis be used to assist management in their evaluation? Discuss the different ratios that exist and how they differ from each other.

Please answer these questions and give an explanation as to the answer: Question 1 What ratio...

Please answer these questions and give an explanation as to the answer: Question 1 What ratio measures the underlying risk of a company? Question 2 Gaston Co. reports the following cash activities for the year: Receive cash from customers $100,000 Pay cash to purchase building $90,000 Receive cash from issuance of stock $50,000 Pay cash for employee salaries $40,000 Pay cash for dividend to stockholders $20,000 Receive cash from sale of land $70,000 Pay cash for repayment of borrowing $80,000...

True/False Give a brief explanation for your answer ____ 1. The purpose of the work opportunity...

True/False Give a brief explanation for your answer ____ 1. The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment. ____ 2. Molanda sells a parcel of land for $45,000 in cash and the buyer assumes Molanda’s mortgage of $20,000 on the land. Molanda pays a real estate agent $3,000 on the trasnaction. Molanda’s amount realized is $62,000. ____ 3. Cassie purchases a sole...

Question