Question

In: Accounting

What are the three aspects of the bond market? (Regarding the buying and selling of bonds...

What are the three aspects of the bond market? (Regarding the buying and selling of bonds as an investment)

Short paragraph please! (

Solutions

Expert Solution

Bond is a legal document which is given by the corporate  to the lender of the money to invest in some business and the bond holder is paid interest on the amount lended by them. Bonds are the long term debt. The three aspects of bonda are face value, maturity and interest. The face value is the value at which the bond is issued. This is the original price which is lended by the bond holder. When the bond matures then this face value is paid alongwith the interest. And maturity is the period when the bond get matures . Suppose the bond is for 30 years then that bond will get mature after 30 years from the date of issue. And interest is the amount paid by the corporate firm to the bondholder for the money lended by them.

Buying and selling of bond takes place after the new bonds are issued. Then these bonds are traded in the secondary market. The trade of these bonds take place through various brokers.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

You are considering three investments. The first is a bond that is selling in the market...
You are considering three investments. The first is a bond that is selling in the market at $1,200. The bond has a $1,000 par value, pays interest semi-annually at 10%, and is scheduled to mature in 10 years. For bonds of this risk class you believe that a 12% rate of return should be required. The second investment that you are analysing is a preference share ($100 par value) that sells for $95 and pays an annual dividend of $10....
You are considering three investments. The first is a bond that is selling in the market...
You are considering three investments. The first is a bond that is selling in the market at $1 200. The bond has a $1 000 par value, pays interest at 8% and is scheduled to mature in 10 years. For bonds of this risk class you believe that a 9% rate of return should be required. The second investment that you are analyzing is a preferred stock ($125 par value) that sells for $120 and pays an annual dividend of...
" A portfolio manager is considering buying two bonds. Bond A matures in three years and...
" A portfolio manager is considering buying two bonds. Bond A matures in three years and has a coupon rate of 10% payable semiannually. Bond B, of the same credit quality, matures in 10 years and has a coupon rate of 12% payable semiannually. Both bonds are priced at par. Suppose that the portfolio manager plans to hold the bond that is purchased for three years. Which would be the best bond for the portfolio manager to purchase? Suppose that...
The Fed decreases the interest rate base by: a. Buying bonds. b. Selling bonds. c. Printing...
The Fed decreases the interest rate base by: a. Buying bonds. b. Selling bonds. c. Printing money. d. Reducing the reserve ratio.
There are two bonds in the market: Bond A is a coupon bond with a nominal...
There are two bonds in the market: Bond A is a coupon bond with a nominal value of $100, maturing in one year, with coupon of $5 paid every six months. Bond B is a six-month pure-discount bond which pays $100. Suppose that the annual interest rate is 5% compounded monthly. (a)What is the non-arbitrage price of the bonds? (b)Explain how to replicate a pure-discount bond maturing in one year, by using a combination of the bonds in the market.
The process of buying or selling a future. what is involved?
The process of buying or selling a future. what is involved?
Consider three bonds with 8 percent coupon rates, all selling at face value. The short-term bond...
Consider three bonds with 8 percent coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity of 8 years, and the long-term bond has maturity of 30 years. a) What will happen to the price of each bond if their yields increase to 10 percent? b) What will happen to the price of each bond if their yields decrease to 6 percent? c) What do you conclude about the...
Consider three bonds with 6.6% coupon rates, all selling at face value. The short-term bond has...
Consider three bonds with 6.6% coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. a. What will be the price of each bond if their yields increase to 7.6% in 4 Years, 8 Years, 30 Years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) What will be the price of each bond if their...
Please do it by type not write. 1. Consider the market for buying and selling alcohol...
Please do it by type not write. 1. Consider the market for buying and selling alcohol in Moscow. Suppose that, after a series of troubling incidents, the city decides it needs to protect citizens by discouraging alcohol consumption. Using a simple sketch of demand, show how each of the following policies would be expected to impact the behavior of buyers: a. The city buys several billboards showing the devastating results of drunkdriving accidents. b. The city significantly increases the tax...
Comparing alternative offers Buying a coupon bond –In the primary market, new bond 5 years to...
Comparing alternative offers Buying a coupon bond –In the primary market, new bond 5 years to maturity; pays $800 per year –Annual interest rate of 8% Principal value=face value=$10,000 (repaid at the maturity date) –In the secondary market Pays $600 each year for 5 years and repays principal of $10,000 at the end of the fifth year
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT