From the perspective of an individual investor, what good are bond ratings? Do bond ratings indicate the amount of market risk embedded in a bond? Explain.
Answer to relevant QuestionsUsing the bond returns in Table 10.1 as a basis of discussion: a. Compare the returns during the 1970s to those produced in the 1980s. How do you explain the differences? b. How did the bond market do in the 1990s? How does ...Describe LYONs, and note how they differ from conventional convertible securities. Are there any similarities between LYONs and conventional convertibles? Explain. A certain convertible bond has a conversion ratio of 21 and a conversion premium of 20%. The current market price of the underlying common stock is $40. What is the bond’s conversion equivalent? An investor is in the 28% tax bracket and lives in a state with no income tax. He is trying to decide which of 2 bonds to purchase. One is a 7.5% corporate bond that is selling at par. The other is a municipal bond with a ...What does the term duration mean to bond investors and how does the duration of a bond differ from its maturity? What is modified duration, and how is it used? What is effective duration, and how does it differ from modified ...
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