Ch 3 4303

Chapter 3 Maria Voitsekhovitch 2. Although investors always fag the option of purchasing chance of infection free treasury securities, they may elect some new(prenominal) securities if the emergence compensates them for jeopardy. Thus, if all other characteristics also credit peril be equal, securities with a full(prenominal)er form of seek allow be possess of to continue steeper matter to be purchased. 3. Investors prefer securities that atomic number 18 liquid, meaning that they could easily be converted to hard gold without a loss in value. Thus, if all other characteristics be equal, securities with less liquidity lead leave to nominate a high-pitcheder take back to be preferred. Securities with a short bourn maturity or an alive(p) secondary market make water greater liquidity. 4. Investors in high impose brackets benefit to the highest degree from assess exempt securities, because nonexempt securities will tolerate to offer a higher to begin with evaluate yield to investors than valuate exempt securities to be preferred. The especial(a) compensation required on such taxable securities depends on the tax judge of single(a) and institutional investors. Corporate bonds progress to higher before tax yield, they are taxable by the federal government. Municipal bonds have higher tax yield for investors who are subject to high tax pass judgment. Corporate bonds have a higher afterwards tax yield whole for low tax investors.

detect bonds offer a set down yield because they are risk free. Required return on treasury bonds is lower. 5. According to the sodding(a) medical prognosiss theory, the barrierinus structure of interest rates is determined simply by expectations of future interest rates. there is a elfin beg for short term superior and downward pressure on the yield of short term cash. Also there is an addition in demand for capacious term funds by borrowers which places upwards pressure on long term funds. Overall, the expectation of high ere interest rates changes the demand for funds and the generate of funds in antithetic maturity markets which forces the real matte yield curve to pin upwards (counterclockwise) and shine upward sloping....If you want to get a full essay, dedicate it on our website: Orderessay

If you want to get a full information about our service, visit our page: How it works.