Why is modified duration an inappropriate measure for a high-coupon callable bond?
What will be an ideal response?
Money managers want to know the price sensitivity of a bond when interest rates change. Modified duration is a measure of the sensitivity of a bond's price to interest-rate changes, assuming that the expected cash flow does not change with interest rates. Consequently, modified duration may not be an appropriate measure for bonds with embedded options because the expected cash flows change as interest rates change.
For example, when interest rates fall, the expected cash flow for a callable bond may change. In the case of a putable bond, a rise in interest rates may change the expected cash flow.
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When a crisis hits, corporate communicators should
A) deflect blame to third parties. B) reserve all comments for their favorite media outlets. C) get top management involved immediately. D) go into lockdown mode when asked questions. E) minimize the amount of information given to the public.
Ethical Dilemma in Publishing Laurence heads the advertising department for a chain of local weekly newspapers. His friend, who writes news, shared an upcoming news story to be printed in the next edition. The story discloses that a local quick oil
change firm has been cited for illegally dumping used oil and that customers have alleged that they paid for oil changes that were not made. As a major advertising client, the oil change firm is placing a full-page ad that mentions its environmentally safe handling methods and trustworthy service. Answering the six questions in the Pagano Model, help Laurence decide what action, if any, he should take.
Which of the following statements is true of the sources of competitive advantage?
A. The best companies choose one source of competitive advantage and perfect it. B. Trade-offs do not occur among the six sources of competitive advantage. C. It is possible to improve more than one source, but they should be tackled one at a time. D. It is possible to improve quality and also enhance speed. E. When companies improve one source of competitive advantage, others suffer.
Strategic goals are
A. focused on the major actions a unit must take. B. the major targets that relate to the long-term survival of an organization. C. the procedures and processes to get day-to-day work done. D. specific to a functional area in an organization. E. driven by operational plans.