Return on Financial Assets - Math Problem Example

Only on StudentShare

Extract of sample
Return on Financial Assets

tainty (low risk). In other words, invested money can earn higher profits only if there is a possibility of it being lost. Likewise, a corporate bond has several risks attached to it such as term to maturity risk, degree of liquidity risk and its credit rating. Each bond is discussed below with regard to the risk attached to it. I. Bond X will earn the highest return because of low credit rating which means that agencies regard this firm as highly risky. Moreover, it also involves maturity risk and degree of liquidity risk which is assumed as it is not stated. II. Bond W will earn a lower return in comparison to X but higher than Y and Z, as it is rated better by the rating agency which denotes low risk in terms of business operation. However maturity and liquidity risk exists which makes investor hesitant to take it unless it offers required return for it. III. ...
Download paper


Consider the following four debt securities, which are identical in every characteristic except as noted:  W: A corporate bond rated AAA  X: A corporate bond rate BBB  Y: A corporate bond rated AAA with a shorter time to maturity than bonds W and X  Z: A corporate bond rated AAA with the same time to maturity as bond Y that trades in a more liquid market than bonds W, X, or Y  1…
Author : bbarrows

Related Essays

The Return of Depression Economics and The Crisis of 2008
4 pages (1004 words) Essay
A real-life career situation is more meaningful and useful than a hypothetical one.
4 pages (1004 words) Essay
Financial Reporting on Cement Roadstone Holdings Plc.
21 pages (5271 words) Dissertation
Theoretical limitations of the CAPM
7 pages (1757 words) Essay
6 pages (1506 words) Essay
Accounting and Financial Management
6 pages (1506 words) Research Paper
Stock Rate of Return
4 pages (1004 words) Essay
Assets pricing
4 pages (1004 words) Essay
Motivation and Oerformance Management
2 pages (502 words) Assignment
Research Paper for chosen topic
8 pages (2008 words) Research Paper
course project week 1
1 pages (251 words) Coursework
Got a tricky question? Receive an answer from students like you! Try us!