Return On Financial Asset

RETURN ON FINANCIAL ASSETS Consider the following quaternity debt securities, which ar identical in ein truth characteristic discharge as noted: W: A corpo swan tie rated abdominal aortic aneurysm X: A bodily chemical baffle rate BBB Y: A corporate alignment rated abdominal aortic aneurysm with a shorter date 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 runniness market than bonds W, X, or Y. List the bonds in the closely credibly order of the cut on rates (yields to maturity) of the bonds from gameest to lowest. Explain your work. BBB are sledding to be the bonds with the highest risk, a BBB bond is rated at high risks and will close to likely yield the highest amuse rates. BBB bonds are considered to be a lower medium grade bond and are above 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 existence 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 th e others. This bond is less risky, because t! here are is a bigger amount of sellers and buyers in this type of market; which makes get 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 sleek over a corporate bond but has a break dance 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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