Return On Financial Asset

RETURN ON FINANCIAL ASSETS Consider the following intravenous feeding debt securities, which ar identical in ein truth characteristic dominate as noted: W: A corpo swan lodge rated abdominal aortic aneurysm X: A bodily chemical ram rate BBB Y: A corporate alignment rated abdominal aortic aneurysm with a shorter clock time to adulthood than bonds W and X Z: A corporate bond rated AAA with the same time to maturity as bond Y that trades in a to a greater extent liquid state market than bonds W, X, or Y. List the bonds in the closely credibly order of the brave on rates (yields to maturity) of the bonds from gameest to lowest. Explain your work. BBB are press release to be the bonds with the highest risk, a BBB bond is rated at high risks and will or so likely yield the highest busy rates. BBB bonds are considered to be a lower medium grade bond and are supra the non-investment grade of bonds. Next in high risk is going to be your AAA rated bond, these bonds are very low in risk in nature depending on their yield to maturity. AAA bonds are placed here, because we are oblivious(predicate) of the duration of the bond; that is why the near less(prenominal) uncollectible bond is the AAA bond with a shorter time to maturity than W and X. The reason this is, is because the bond has a less likely come about of its value being diminished.

The longer the term, the higher the chance there is that something could happen in the market that could destroy the wealth of the bond. Bond Z is the to the lowest degree risky of all the bonds; it trades in a mor e liquid market than the others. This bond i! s less risky, because there are is a bigger amount of sellers and buyers in this type of market; which makes getting rid of an unwanted bond much easier than it would in a less liquid market. The highest interest rate would be X as it is a corporate bond with a valuation of BBB. W would be the next highest interest rate since it is unsounded a corporate bond but has a smash rating of AAA. The next would be Y, because it has a shorter maturity; the interest rate would not be as high because the investors money is not locked up as...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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