Your Perfect Assignment is Just a Click Away

Starting at $8.00 per Page

100% Original, Plagiarism Free, Customized to Your instructions!


Johnson & Wales University Economics Value Price & Return Questions Discussion

Johnson & Wales University Economics Value Price & Return Questions Discussion

Question Description

4. Suppose that the coupon rate of a floating- rate security resets every six months at a spread of 70 basis points over the reference rate. If the bond is trading at below par value, explain whether the discount margin is greater than or less than 70 basis points.

5. Suppose that an investor with a five- year investment horizon is considering purchasing a seven- year 9% coupon bond selling at par. The investor expects that he can reinvest the coupon payments at an annual interest rate of 9.4% and that at the end of the investment horizon two- year bonds will be selling to offer a yield to maturity of 11.2%. What is the total return for this bond?

6.The price value of a basis point will be the same regardless if the yield is increased or decreased by 1 basis point. However, the price value of 100 basis points ( i. e., the change in price for a 100- basis- point change in interest rates) will not be the same if the yield is increased or decreased by 100 basis points. Why?

7.State why you would agree or disagree with the following statement: As the duration of a zero- coupon bond is equal to its maturity, the price responsiveness of a zero- coupon bond to yield changes is the same regardless of the level of interest rates.

8.State why you would agree or disagree with the following statement: When interest rates are low, there will be little difference between the Macaulay duration and modified duration measures.

9. State why you would agree or disagree with the following statement: If two bonds have the same dollar duration, yield, and price, their dollar price sensitivity will be the same for a given change in interest rates.

10. The yield spread between two corporate bond issues reflects more than just differences in their credit risk. What other factors would the yield spread reflect?

"Place your order now for a similar assignment and have exceptional work written by our team of experts, guaranteeing you A results."

Order Solution Now

Our Service Charter

1. Professional & Expert Writers: Eminence Papers only hires the best. Our writers are specially selected and recruited, after which they undergo further training to perfect their skills for specialization purposes. Moreover, our writers are holders of masters and Ph.D. degrees. They have impressive academic records, besides being native English speakers.

2. Top Quality Papers: Our customers are always guaranteed of papers that exceed their expectations. All our writers have +5 years of experience. This implies that all papers are written by individuals who are experts in their fields. In addition, the quality team reviews all the papers before sending them to the customers.

3. Plagiarism-Free Papers: All papers provided by Eminence Papers are written from scratch. Appropriate referencing and citation of key information are followed. Plagiarism checkers are used by the Quality assurance team and our editors just to double-check that there are no instances of plagiarism.

4. Timely Delivery: Time wasted is equivalent to a failed dedication and commitment. Eminence Papers are known for the timely delivery of any pending customer orders. Customers are well informed of the progress of their papers to ensure they keep track of what the writer is providing before the final draft is sent for grading.

5. Affordable Prices: Our prices are fairly structured to fit in all groups. Any customer willing to place their assignments with us can do so at very affordable prices. In addition, our customers enjoy regular discounts and bonuses.

6. 24/7 Customer Support: At Eminence Papers, we have put in place a team of experts who answer all customer inquiries promptly. The best part is the ever-availability of the team. Customers can make inquiries anytime.