Notice: Payments for answers will end 4/10/2017. Click for more info.
You have new items in your feed. Click to view.
Question and answer
Q: Identify and explain what factors may cause a change in the market/fair value of fixed rate notes and bonds?
A: Investors expect a fair rate of return from bonds, based on prevailing interest rates, term length of the bonds, and their credit rating. [ Since prevailing interest rates change continually, there is interest rate risk in holding bolds if the investor wants to sell the bonds before their maturity. For instance, if a bond, with a $1,000 par value, is issued with a nominal interest rate of 5%
when bonds with similar risk and terms are also at 5%, then the bond can be sold for $1,000. But if interest rates rise to 6%, then the price of the bond is going to drop so that the bond’s $50 interest payment per year will have a yield to maturity (YTM) of 6%. So there are capital gains and losses associated with bonds if they are sold before maturity, so even with securities that are considered risk-free in terms of default, such as U.S. Treasuries, there is still interest rate risk. Another way to look at bond prices and yields is to note that the price of a bond is equal to the sum of the present values of the coupon payments and the principal. When interest rates change, then the present value of those payments changes, also, causing the price of the bond to change with it. Note that since the interest rate factor is in the denominator, it is inversely related to the bond price. The relationship between bond prices and prevailing interest rates is neither simple nor linear. How much bond prices rise or fall depends on the terms of the bonds, the current bond yield, and whether the bonds have embedded options, such as being callable or putable. Burton G. Malkiel has described most of the important general relationships between interest rates and bond prices. for more visit ]
Expert answered|danimai|Points 451|
Question
Asked 12/18/2011 8:27:34 AM
0 Answers/Comments
Get an answer
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
Which of the following words needs an apostrophe? Exams Eleanores Sizes Quizzes
Weegy: Eleanores needs an apostrophe. Eleanore's User: Select the sentence that has the correct use of the dash. (Points : 2) Maria was more than just a friend~~she was like a sister. Maria was more than~~just a friend she was like a sister. Maria was more~~than just a friend she was like a sister. None of the above Weegy: Maria was more than just a friend~~she was like a sister. (More)
Question
Expert Answered
Updated 3/8/2014 11:09:28 PM
0 Answers/Comments
_____ is a reimbursement to retailers for in-store support of a product, such as an off-shelf display. (Points : 2) Case allowance Merchandise allowance Forward buying Diverting Push money
Weegy: Push money is a reimbursement to retailers for in-store support of a product, such as an off-shelf display. User: Ads on the sides of delivery trucks, ads on the fence around a baseball field, and ads that you see on interstate billboards are all examples of _____ media. (Points : 2) out of house guerrila place based mobile supplemental (More)
Question
Expert Answered
Updated 11/27/2014 5:12:32 AM
1 Answer/Comment
Ads on the sides of delivery trucks, ads on the fence around a baseball field, and ads that you see on interstate billboards are all examples of OUT OF HOME media.
Added 11/27/2014 5:12:32 AM
This answer has been confirmed as correct, not copied, and helpful.
27,058,164 questions answered
Popular Conversations
Aristotle was a student of Plato's. True False
Weegy: Aristotle was a student of Plato's. TRUE.
7/9/2017 6:34:10 PM| 1 Answers
Most collisions are caused by __________ A. drivers falling asleep at ...
Weegy: Most collisions are caused by driver's attitude.
7/9/2017 4:51:29 PM| 1 Answers
k2 + 3k + 2 = (k2 + k) + 2 ( __________ )
7/8/2017 8:58:45 AM| 1 Answers
Parasite can be Protozoa,fungi, or multicellular organisms. TRUE or ...
Weegy: Parasites can be protozoa, fungi, or multicellular organisms. TRUE.
7/7/2017 6:41:18 PM| 1 Answers
Development disabilities cannot be cured. TRUE or FALSE.
Weegy: Developmental disabilities cannot be cured. TRUE.
7/7/2017 6:00:57 PM| 1 Answers
. Classification of living things takes into consideration all of ...
Weegy: Classification of living things takes into consideration all of the following except: presence of cell ...
7/5/2017 12:07:33 PM| 1 Answers
What type of disorder is myasthenia gravis? A. Inflammatory ...
Weegy: Myasthenia gravis is a type of immune disorder. User: What surgical procedure involves breaking an ankylosed ...
7/5/2017 9:35:49 AM| 1 Answers
The lungs are the primary organ of the: digestive system respiratory ...
Weegy: The lungs are the primary organ of the: respiratory system. User: Endorphins are manufactured by the brain to ...
7/5/2017 6:54:42 AM| 1 Answers
During puberty you need more food and _____ to grow. oxygen carbon ...
Weegy: During puberty you need more food and oxygen to grow. User: Each cell in your body contains chromosomes.
7/5/2017 6:43:00 AM| 1 Answers
The condition of equilibrium that results in the displacement of the ...
Weegy: The condition of equilibrium that results in the displacement of the mantle by the continental and oceanic crust ...
7/10/2017 1:50:08 PM| 0 Answers
What is another name for the Circum-Pacific Belt? A. Pacific Ring ...
Weegy: Pacific Ring of Fire is another name for Circum-Pacific Belt
7/10/2017 1:47:35 PM| 0 Answers
Weegy Stuff
S
Points 29 [Total 30] Ratings 0 Comments 9 Invitations 2 Offline
S
Points 10 [Total 10] Ratings 0 Comments 0 Invitations 1 Offline
S
Points 10 [Total 10] Ratings 1 Comments 0 Invitations 0 Offline
S
Points 10 [Total 10] Ratings 0 Comments 0 Invitations 1 Offline
S
Points 4 [Total 4] Ratings 0 Comments 4 Invitations 0 Offline
S
P
P
L
P
P
P
Points 4 [Total 1734] Ratings 0 Comments 4 Invitations 0 Offline
S
Points 3 [Total 3] Ratings 0 Comments 3 Invitations 0 Offline
S
Points 2 [Total 2] Ratings 0 Comments 2 Invitations 0 Offline
S
Points 2 [Total 2] Ratings 0 Comments 2 Invitations 0 Offline
S
Points 2 [Total 2] Ratings 0 Comments 2 Invitations 0 Offline
* Excludes moderators and previous
winners (Include)
Home | Contact | Blog | About | Terms | Privacy | © Purple Inc.