Does a callable bond exhibit negative or positive convexity?
What will be an ideal response?
A bond that is option-free displays positive convexity which means the price appreciation will be greater than the price depreciation for a large change in yield. Positive convexity does not hold for a callable bond. This is because when interest rates fall below a certain yield level, y*, the shape of the yield curve begins turning inward instead of outward. Perfect parallel with a noncallable bond is not achieved even for yields a bit above the coupon rate. This is because there is still the chance the market yield may drop further, making investors hesitant to pay the noncallable price due to the possibility yields will fall.
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A written stop-payment order is:
A. valid for six months, and can be extended for another six months if written instructions are given by the customer. B. valid for only three months unless confirmed in writing. C. not valid for more than 48 hours. D. valid for only 14 days and cannot be extended further even if written instructions are given to the bank by the customer.
_______________________ information is not subjective ad is relatively easy to measure
a. Firmographic b. Psychographic c. Demographic d. None of the above
Use the cost information below for Sundar Company to determine the cost of goods manufactured during the current year: Direct materials used$19,000 Direct labor used 24,500 Factory overhead 55,100 Beginning work in process inventory 10,700 Ending work in process inventory 11,300
A. $79,000. B. $43,500. C. $98,600. D. $98,000. E. $42,900.
Which of the following is an example of the benchmarking function of the budgeting process?
A) A budget demands integrated input from different business units and functions. B) Budgeting requires close cooperation between accountants and operational personnel. C) Budget figures are used to evaluate the performance of managers. D) The budget outlines a specific course of action for the coming period.