What are some of the reasons that would make bond market prices would rally (go up)? Multiple Choice If there was lots of bad economic news and if worried investors sold all of their stocks. This would happen if Iran detonated a nuclear bomb and if both Saudi Arabia and Egypt quickly bought nuclear weapons from Pakistan to counter the threat from Iran. If the COVID-19 virus pandemic got worse and caused the death of 100 million globally. All statements made above are true.
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- 15) Flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as gold and US treasury bonds (Wikipedia). When you heard Wuhan was locked down on Jan 22, 2020 (the first city in China being locked down), in fear of the spreading out the fatal virus, you decide to purchase 10-year US treasury note. YTM of available 10-year US treasury note was around 1.70% (annualized rate), with coupon rate of 1.12% (annualized rate). Coupon is paid every 6 months. 6 months later the YTM of the same bond drops to 0.64% (right before the first coupon payment). Assuming the maturity date of the bond you invested is Jan 22, 2030. With the information above, please answer the following four questions. Q:What is the bond price when you invested? (hint: calculate half-year discount rate and coupon payment first. Face value of US 10-year treasury note is $1000.)17) Flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as gold and US treasury bonds (Wikipedia). When you heard Wuhan was locked down on Jan 22, 2020 (the first city in China being locked down), in fear of the spreading out the fatal virus, you decide to purchase 10-year US treasury note. YTM of available 10-year US treasury note was around 1.70% (annualized rate), with coupon rate of 1.12% (annualized rate). Coupon is paid every 6 months. 6 months later the YTM of the same bond drops to 0.64% (right before the first coupon payment). Assuming the maturity date of the bond you invested is Jan 22, 2030. With the information above, please answer the following four questions. Q4: What is the annualized bond rate of return in percentage term after holding the bond for 6 months (right before the first coupon payment) ?Q : The pandemic issue due to covid19 has brought many economic at lower ebb.It has created impact on financial and non-financial markets.But the Economists are quite hopeful about economic recovery and their estimations are a kind of hope for all investors.Mr . Akhan is quite hopeful about stock market recovery hence he plans to invest 20 percent of his wealth in stock market.With assistance of team he has finalized to choose one of the following options.kindly help him in making decision: PSP - Stock Company is currently undergoing expansion and is not expected to change its cash dividend for the next 4 years the last dividend paid was PKR 3. Having completed expansion targets, higher earnings are expected to result causing a 30% increase in dividends each year for 3 years. After these three years of 30% growth, the dividend growth rate is expected to be 2% per year forever. Nestle Pakistan - Stock Company has reputation of having stable dividend policy. Company shall pay…
- Choose Correct word in Bold Suppose you are an investor who owns shares of Facebook stock. If the Fed implements a stimulative monetary policy, then interest rates will (increase/decrease). If, as a result of the policy implementation, you believe that the economic conditions are much worse than anyone is anticipating, and that sales and earnings for Facebook could decrease significantly in the near future, then you believe that the value of the stocks will (increase/decrease), and as a result, your shares of Facebook stock would (increase/decrease) in value.Assume that you buy some shares of Apple in the Philippines in pesos. Your friend in France buys some Apple shares in Europe in euros. Will your rate of return over the next year be the same as your friend’s? Is your market beta risk different from your friend’s risk? Explain2. A fund manager is expecting a surge in Turkey's stock market in a month and wants to invest $ 10 million. However, because he doesn't sure about USD/TRY exchange rate's direction, he doesn't want to take exchange rate risk. In order to clear away the exchange risk, he decides to use forward swap. On the other hand, a Turkish bank is expecting a depreciation on USD/TRY at the end of the month and agreed with the fund for a swap contract. Spot Exchange Rate Today 18.10-18.50 Swap Points 70/90(30 days) Based on quotation information above, what is the swap exchange rate? USD/TRY a) 18.90 TRY b)19 TRY 3 Whi c) 19.40 TRY d) 20 TRY
- 46 FDI often involves the establishment of new production facilities in foreign countries such as Honda's Ohio plant. ut of Select one: O True O False 47 The world beta" measures the ut of Select one: O a risk of default and bankruptey. O b risk-adjusted performance. O c.unsystematic risk. O d sensitivity of returns on a security to world market movements.Which of the following is an example of a systematic risk? Bond investor invests in a Japanese investment grade bond and receives coupon payments in Japanese yens A firm hires a former politician with ties to the Republican party when a political climate in the state changes U.S. government announces an increase in corporate tax rate Bond investor receives news about a bond issuer issuing another corporate bondSuppose interest rates on Treasury bonds rose from 5% to 9% as a result of higher interest rates in Europe. What effect would this have on the price of an average company's common stock? (Hint: in your explanation consider alternative investment to common stocks; a relatively riskless investment)
- With the inflation at a 44-year high and climbing, fuel at the highest prices ever in the history of US and supply and distribution constraints, how does this impact investors that bet against banks and credit card companies?(b) Despite the world's promising economic condition, she believes that the domestic market is still unstable and anticipates it to continue a downtrend till mid of year 2020. The investment analyst informed her that the investment fund in the following: Khadijah was the top fund manager who manages an equity portfolio at Bank Islam Berhad. Number of Share Economic Condition Price per Unit Recession Beta RM1,228.88 18,080 16,070 9,600 1.59 Normal RM838.50 2.01 Вoom RM450.89 0.65 The current Treasury Bill is 9.2 percent and market portfolio is 13.7 percent. Based on the information above: i. Calculate the required rate of return. ii. Khadijah has analyzed that there are several risk factors that drive the return on the share market as follows: Risk Factor Investment Pandemic 7.8 Oil Price GDP Inflation Market return (%) 4.43 5.2 5.5 Beta 1.21 0.9 1.87 2.6 The risk-free rate is 3.98 percent, calculate the required rate of return on the share.Which of the following is an example of a firm-specific risk? The Federal Reserve decreases the federal funds rate U.S. government announces an increase in corporate tax rate Bond investor invests in a Japanese investment grade bond and receives coupon payments in Japanese yens Bond investor learns from the news that the inflation rate is expected to increase next year