The yield spread between two corporate bond issues reflects more than just differences in their credit risk. What other factors would the spread reflect?
Answer to relevant QuestionsExplain the role that forward rates play in making investment decisions. Answer the below questions. (a) “Empirical evidence suggests that with respect to bond risk premiums that influence the shape of the Treasury yield curve, there is a linear relationship between Treasury average returns ...Answer the below questions. (a) What is an embedded option in a bond? (b) Give three examples of an embedded option that might be included in a bond issue. (c) Does an embedded option increase or decrease the risk premium ...Why is a stripped Treasury security identified by whether it is created from the coupon or the principal? The bid and ask yields for a Treasury bill were quoted by a dealer as 5.91% and 5.89%, respectively. Shouldn’t the bid yield be less than the ask yield, because the bid yield indicates how much the dealer is willing to pay ...
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