What should happen to a securitys nominal interest rate as the securitys liquidity risk increases?

Question:

What should happen to a security’s nominal interest rate as the security’s liquidity risk increases?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Markets and Institutions

ISBN: 978-0077861667

6th edition

Authors: Anthony Saunders, Marcia Cornett

See More Books

Question Posted: Jan 27, 2015 08:29 AM

See More Questions

What should happen to a securitys equilibrium interest rate as the securitys liquidity risk increases?
What should happen to the demand for speed (measured by the average speed on highways) once airbags are included on cars?
If interest rates increase, what should happen to a) The price of a Ginnie Mae bond and the price of a municipal bond? b) The payments received from a Ginnie Mae bond and the payments received from a...
In Figure P23.15, determine the point (other than infinity) at which the electric field is zero. 1.00 m -2.50 : 6.00 C
Explain why goodness-of-fit tests are always right-tailed tests.
Holz Disc Golf Course was opened on March 1 by Ian Holz. The following selected events and transactions occurred during March. Mar. 1 Invested $20,000 cash in the business. 3 Purchased Rainbow Golf...
Give two arguments for and two arguments against partial-birth abortions.
Youve completed your vacation in a foreign country. At the airport, you discover you have the equivalent of $20 local currency left over. The exchange control officer tells you that you cant convert...
In the beginning of January 2 0 2 3 you want to estimate the value of a stock. On December 3 1 2 0 2 2 the price of the stock was $ 6 3 . 5 and you believe that the annual dividend growth rate and...
1. How did P&G's decision to centralize and standardize global business services in the 1990s enable it to effectively outsource business services starting in 2003? 2. How has outsourcing benefited...
What is the relationship between present values and interest rates as interest rates increase?
A particular securitys equilibrium rate of return is 8 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.5 percent. The securitys liquidity risk...
Find the mean and median for the data in the following table. Life (Hours) of 50 Randomly Selected Lightbulbs Interval 799.5-899.5 899.5-999.5 999.5-1,099.5 1,099.5-1,199.5 1,199.5-1.299.5 Frequency...
If the inflation premium is 2 percent and the nominal interest rate is 1 percent, what is the real interest rate? What is the real interest rate if the inflation premium is 3 percent while the...
Schumpeters theory of economic development presents the entrepreneur as an innovator. Using examples of contemporary businesses, explain the five forms of innovation and explain why they might be...
Kirzners theory of entrepreneurship revolves around the concept of alertness to opportunity. Describe and explain the concept and illustrate the idea as applied to entrepreneurs today.
In 2019, Joan Cannon incurred the following expenses relating to her vacation home: During 2019, Joan personally used the vacation home for 20 days. Determine the rental expense deduction that she is...
What are the main theories in economics that discuss the entrepreneur? In one of the theories identified, explain the role of the entrepreneur in the economy.
Let X Laplace(0, b), i.e., where b > 0. Define Y = |X|. Show that Y Exponential (1/b). fx() 1 ) (E), exp 26 b
Explain the operation of the dividends received deduction.
For which types of investors is there a personal tax disadvantage of debt?
One form of the interest rate parity equation appears as 1 + r USt = (1/S t ) (1 + r UKt ) F t where both the spot and forward rates are expressed in terms of dollars for pounds or direct exchange...
What are some reasons why interest rate parity may not hold in spite of the economic forces that should ensure the equilibrium relationship?
At the beginning of the quarter, you purchased a $100,000 Treasury bond futures contract for 108-12. Calculate the profit on the futures contract if the price at the end of the quarter is 106-16,...
java code ReadFile Create-a linked list from an input file (input.txt) that contains an even number of first names. The number of items in the file is unknown. Split Create-a split function that...
Complete a method named findValue which accepts an IntArray and an Int value and returns whether the array contains the passed value. Your method should not modify the passed array. However, you...
Write program Sum.java that just prints the strings that it is given at the command line, one per line. If nothing is given at the command line, print "No arguments". Modify your program (Make a copy...

What should happen to a securitys nominal interest rate as the securitys liquidity risk increases?

Question:

Step by Step Answer:

The nominal interest rate on a security reflects its relat...View the full answer

Financial Markets and Institutions

Students also viewed these Banking questions