Which of the following should be your main concern if you hold a 100-year bond issued by Disney which now has 63 years more to go before maturity? A Refinancing risk B Interest rate risk C Credit risk D Environmental risk
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- A
Refinancing risk
- B
Interest rate risk
- C
Credit risk
-
DEnvironmental risk
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- Which has morereinvestment rate risk: a 1-year bond or a 10-yearbond?What is interest rate (or price) risk? Which bondhas more interest rate risk: an annual payment1-year bond or a 10-year bond? Why?For an investor who plans to purchase a bond that matures in one year, the primary concern should be Select one: a. Yield to maturity b. Interest rate risk c. Coupon rate risk d. Exchange rate risk Clear my choice
- financial risk management . Assume you have the following asset and liability in your Balance Sheet:Asset - Bond AModified Duration = 2.6 yearsValue= RM1.5 millionLiability - Bond BModified Duration = 3.1 yearsValue= RM1.0 million What is the expected change in Net Worth if interest increases by 1% ?9. Interest Rate Risk. Suppose that you are a fixed income portfolio manager at Bourbon Street Capital. You have the following bonds issued by Royal, Inc. and Chartres, LLC in your portfolio and you want to understand the risk profile of your portfolio. Given that both bonds pay semiannual coupons, answer the following questions. (Remember to convert your answer to units of full years.) Coupon Yield to maturity Maturity (years) Royal, Inc. Chartres, LLC. Bond A Bond B 9% 8% 5 $100.00 $104.055 8% 8% 2 Par $100.00 Price $100.00 (a) What is the DV01 (at current prices) for bonds A and B? (b) What are the Macaulay Durations (at current prices) for the two bonds? (c) What are the modified durations for the two bonds? (d) What is the convexity of the two bonds?FINA2... moodle1.du.edu.om T riay question Suppose you plan to invest part of your savings in bonds issued by Salalah Food Industries. Therefore, you must calculate the current yield on these bonds before making the decision to invest in them. The information below has been provided to assist you in calculating the current yield on these bonds. market price 1892 OMR, annual coupon rate 0.17 face value 2,500 OMR maturity 14 years. Select one: a. 0.1700 b. 0.1287 C. All the given answers in this question are wrong d. 0.2246 II
- Your uncle would like to limit his maturity risk and his default risk, but he would still like to invest in corporate bonds. Which of the possible bonds listed below best satisfies your uncle's criteria? OA. 30 year U.S.. Government Treasury Bond B. BBB bond with 10 years to maturity. OC. AAA bond with 20 years to maturity. D. AAA bond with 10 years to maturity.True or false? the YTM is the annual return that an investor earns on a bond of the investor purchases the bond today and sells it before maturityD4) Finance An investor has two choices: a) Investing in a five-year bond and hold it for five years b) Investing in a two-year bond and reinvesting in a three year bond when it matures If the investor opts for choice a), he/she eliminates the following risk/s: Group of answer choices °price risk and currency risk °reinvestment risk and currency risk °interest rate risk and currency risk °reinvestment risk °None of the answers are correct
- The rate of return on which one of the following has a risk premium of 0%? Multiple Choice Long-term government bonds Long-term corporate bonds Intermediate-term government bonds U.S. Treasury bills Large-company stocksfinancial risk management Assume you have the following asset and liability in your Balance Sheet:Asset - Bond AModified Duration = 2.6 yearsValue= RM1.5 millionLiability - Bond BModified Duration = 3.1 yearsValue= RM1.0 million a. Calculate the duration gap.For an investor who plans to purchase a bond that matures in one year, the primary concern should be Select one: a. Interest rate risk b. Coupon rate risk c. Exchange rate risk d. Yield to maturity