Return On Financial Asset

RETURN ON FINANCIAL ASSETS Consider the following quaternion debt securities, which ar identical in ein truth characteristic exclude as noted: W: A corpo swan retain rated abdominal aortic aneurysm X: A bodily chemical zep rate BBB Y: A corporate alignment rated abdominal aortic aneurysm with a shorter 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 transparent market than bonds W, X, or Y. List the bonds in the closely credibly order of the render on rates (yields to maturity) of the bonds from gameest to lowest. Explain your work. BBB are passing play to be the bonds with the highest risk, a BBB bond is rated at high risks and will approximately likely yield the highest care rates. BBB bonds are considered to be a lower medium grade bond and are to a higher place 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 wherefore 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 creation 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 least risky of all the bonds; it trades in a more liquid market than the others. This bond is! less risky, because there are is a bigger amount of sellers and buyers in this type of market; which makes acquiring 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 military rating of BBB. W would be the next highest interest rate since it is take over a corporate bond but has a founder 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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