Purchase Solution

Relationship between interest rate and maturity

Not what you're looking for?

Ask Custom Question

What's a simple way to assess and compare the default risk of publicly traded bonds? Describe how a bond's interest rate risk is related to its maturity.

Purchase this Solution
Solution Preview

One simple way to assess and compare the default risk of publicly traded bonds is by yield spread and ultimately price. This is because at any given point in time, the price at which a bank bond is traded reflects the market's assessment of the default risk of the issuing bank. One can measure the default risk of a ...

Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Introduction to Finance

This quiz test introductory finance topics.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

View More Free Quizzes
Related BrainMass Solutions

  • Yield To Maturity of the Bond

    Calculate the yield to maturity (YTM) for each bond. b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain.

  • Relationship between interest rates and bond prices

    125668 Explaining the relationship between interest rates & bond price What is the relationship between interest rates and bond prices? When must the yield to maturity of a bond equal the current yield?

  • Bond prices

    The relationship between the number of years until a bond matures and its price is also explained.

  • Bond prices and interest rates: the relationship

    81376 Bond prices and interest rates: the relationship Discuss the relationship between interest rates and bond prices? When must the yield to maturity of a bond equal the current yield?

  • Yield to maturity and Bond Price

    This is because there is a negative relationship betweeen thr Bond prices and interest rates. This discusses the relationship between Yield to maturity and Bond Price

  • The Nickelodeon Manufacturing Co.

    c) Explain the relationship between the number of years until a bond matures and its price. d) Explain the relationships between interest rates and the price of bonds as it relates to (i) premium (ii) Par and (iii) Discount.

  • What is the bond's price if comparable debt yields 12%? What is the current yields and yields to maturity?

    In other words, Explain the relationship in the above example between interest rates (at 12% vs 8%) and the price of the bond. We find a negative relationship between interest rates and the price of the bond.

  • Money, credit, the Federal Reserve

    This is called the term structure of interest rates and when graphed it is called a yield curve. What is the relationship between short and long-term interest rates as the time to maturity of the debt increases?

  • Bonds- Duration

    b) What is the relationship between duration and the amount of coupon interest that is paid? An insurance company is analyzing three bonds and is using duration as the measure of interest rate risk.

View More Related Solutions