But What sense does it make to choose investment 4 over Investment 3, If the expected return of Investment 4 was more than Investment 3, that would have made sense but then given lower return and more risk of investment 4 over investment 3, what sense does it make to even consider investment 4. ThatRead more
But What sense does it make to choose investment 4 over Investment 3, If the expected return of Investment 4 was more than Investment 3, that would have made sense but then given lower return and more risk of investment 4 over investment 3, what sense does it make to even consider investment 4. That should not even qualify for a efficient portfolio.
What is the effective cost to the company, is it the coupon rate or the yield to maturity, it's the yield to maturity. You can consider coupon rate as the cost of debt only for those bonds which are trading at par. when you buy a premium or discount bond of face value let's say 100, you don't pay 10Read more
What is the effective cost to the company, is it the coupon rate or the yield to maturity, it’s the yield to maturity. You can consider coupon rate as the cost of debt only for those bonds which are trading at par. when you buy a premium or discount bond of face value let’s say 100, you don’t pay 100 to the company if it is not bought at par. Either you pay more than 100, in that case, the cost of debt to the company would be less than the coupon rate, or you pay less than 100 and in that case, the cost of debt to the company would be more than the coupon rate. In both cases, it will be equal to the YTM.
Please Imagine the graph of puttable bonds while reading this. When the interest rates rise in the market, obviously the price of the bonds will fall and so the investor who is holding the puttable bonds would be exercising his/her put option on the bond. So at higher interest rates/yields in the mRead more
Please Imagine the graph of puttable bonds while reading this.
When the interest rates rise in the market, obviously the price of the bonds will fall and so the investor who is holding the puttable bonds would be exercising his/her put option on the bond. So at higher interest rates/yields in the market, the exercise of the put option becomes more probable and as a result, the price would not fall below the put price thus exhibiting extremely positive convexity (Sir ke bhasa main Antyant sharma ke girta hai price at higher rates)
My focus in this question was not to calculate Modified, I already know it, my focus was when there is semiannual payment, we use periodic yield this is 6 months yield and in this case if we use that, MD will be 2.59%, So can I say that if I change yield from 9.4051 to 10.4051, the price of the bondRead more
My focus in this question was not to calculate Modified, I already know it, my focus was when there is semiannual payment, we use periodic yield this is 6 months yield and in this case if we use that, MD will be 2.59%, So can I say that if I change yield from 9.4051 to 10.4051, the price of the bond will change by 2.59% or Do I need to say that if I change yield from 4.70225 to 5.70225 , the price of the bond will change by 2.59 %, which one is true?
P+ S+ = C+, Bond + This is given by put-call parity and so for P+ , it will be C+, Bond+ and S-, treat is as an equation , so when you take S+ on the right, it would be S-.
P+ S+ = C+, Bond +
This is given by put-call parity and so for P+ , it will be C+, Bond+ and S-, treat is as an equation , so when you take S+ on the right, it would be S-.
No way you can guess IRR in such a situation, But yeah you can the number of IRR which will exist in this which is no of change in sign of cash flows which is 3, so 3 IRR will exist in this case.
No way you can guess IRR in such a situation, But yeah you can the number of IRR which will exist in this which is no of change in sign of cash flows which is 3, so 3 IRR will exist in this case.
Risk And Return
But What sense does it make to choose investment 4 over Investment 3, If the expected return of Investment 4 was more than Investment 3, that would have made sense but then given lower return and more risk of investment 4 over investment 3, what sense does it make to even consider investment 4. ThatRead more
But What sense does it make to choose investment 4 over Investment 3, If the expected return of Investment 4 was more than Investment 3, that would have made sense but then given lower return and more risk of investment 4 over investment 3, what sense does it make to even consider investment 4. That should not even qualify for a efficient portfolio.
See lesscost of capital
What is the effective cost to the company, is it the coupon rate or the yield to maturity, it's the yield to maturity. You can consider coupon rate as the cost of debt only for those bonds which are trading at par. when you buy a premium or discount bond of face value let's say 100, you don't pay 10Read more
What is the effective cost to the company, is it the coupon rate or the yield to maturity, it’s the yield to maturity. You can consider coupon rate as the cost of debt only for those bonds which are trading at par. when you buy a premium or discount bond of face value let’s say 100, you don’t pay 100 to the company if it is not bought at par. Either you pay more than 100, in that case, the cost of debt to the company would be less than the coupon rate, or you pay less than 100 and in that case, the cost of debt to the company would be more than the coupon rate. In both cases, it will be equal to the YTM.
See lessfixed income Risk and return
Please Imagine the graph of puttable bonds while reading this. When the interest rates rise in the market, obviously the price of the bonds will fall and so the investor who is holding the puttable bonds would be exercising his/her put option on the bond. So at higher interest rates/yields in the mRead more
Please Imagine the graph of puttable bonds while reading this.
When the interest rates rise in the market, obviously the price of the bonds will fall and so the investor who is holding the puttable bonds would be exercising his/her put option on the bond. So at higher interest rates/yields in the market, the exercise of the put option becomes more probable and as a result, the price would not fall below the put price thus exhibiting extremely positive convexity (Sir ke bhasa main Antyant sharma ke girta hai price at higher rates)
See lessQm
Is it B?
Is it B?
See lessModified Duration
My focus in this question was not to calculate Modified, I already know it, my focus was when there is semiannual payment, we use periodic yield this is 6 months yield and in this case if we use that, MD will be 2.59%, So can I say that if I change yield from 9.4051 to 10.4051, the price of the bondRead more
My focus in this question was not to calculate Modified, I already know it, my focus was when there is semiannual payment, we use periodic yield this is 6 months yield and in this case if we use that, MD will be 2.59%, So can I say that if I change yield from 9.4051 to 10.4051, the price of the bond will change by 2.59% or Do I need to say that if I change yield from 4.70225 to 5.70225 , the price of the bond will change by 2.59 %, which one is true?
See lessPut Call Parity Derivatives
P+ S+ = C+, Bond + This is given by put-call parity and so for P+ , it will be C+, Bond+ and S-, treat is as an equation , so when you take S+ on the right, it would be S-.
P+ S+ = C+, Bond +
This is given by put-call parity and so for P+ , it will be C+, Bond+ and S-, treat is as an equation , so when you take S+ on the right, it would be S-.
See lessModified Duration
But the book says for 1% change in ytm of this bond (from 9.4051 to 10.4051 or 8.4051) , bond price will change by 1.295% and not 2.59%,Is this true?
But the book says for 1% change in ytm of this bond (from 9.4051 to 10.4051 or 8.4051) , bond price will change by 1.295% and not 2.59%,Is this true?
See lessPurposes and Controversies of Derivative Markets
The correct statement would be as "Derivative market may or may not be more volatile than spot markets".
The correct statement would be as “Derivative market may or may not be more volatile than spot markets”.
See lessMeasuring returns volatility and correlation
Can you re post this image, it's inverted.
Can you re post this image, it’s inverted.
See lessCapital Budgeting
No way you can guess IRR in such a situation, But yeah you can the number of IRR which will exist in this which is no of change in sign of cash flows which is 3, so 3 IRR will exist in this case.
No way you can guess IRR in such a situation, But yeah you can the number of IRR which will exist in this which is no of change in sign of cash flows which is 3, so 3 IRR will exist in this case.
See less