Question

Long-term capital securities are high-risk than with short-term securities. Why?

Long-term capital securities are high-risk than with short-term securities. Why?

Homework Answers

Answer #1

Answer : Long Term securities are considered as having higher risk than short term secuities. One of The prime reason is interest rate Risk . Interest rate risk is the risk of fluctuations in Long term securities are more than short term securities . Therefore they are considered as riskier than short term securities . Long term capital securities are very sensitive to interest rate changes. Another reason is that long term securities are of long duartion so they are subject to more risk. Because in long run there are various other risk associated such as liquidation of company and others.

Therefore we can say that Long-term capital securities are high-risk than with short-term securities.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Short term capital gains taxes are higher than long term capital gains taxes. How does the...
Short term capital gains taxes are higher than long term capital gains taxes. How does the different tax treatment impact the estimates of alpha in the CAPM model?
If short-term interest rates are lower than long-term rates, why might a borrower still choose to...
If short-term interest rates are lower than long-term rates, why might a borrower still choose to finance with long-term debt?
All else being the same, which has more interest risk, a long-term bond or a short...
All else being the same, which has more interest risk, a long-term bond or a short term bond? What about a low coupon bond compared to a high coupon bond? what about a long-term, high coupon bond compared to a short-term, low coupon bond? Type answers please!
6. How does the risk of short-term funds differ from the risk of long-term funds?
6. How does the risk of short-term funds differ from the risk of long-term funds?
Explain whether the following bonds have lower or higher price risk; Short-term bonds and long-term bonds...
Explain whether the following bonds have lower or higher price risk; Short-term bonds and long-term bonds Low coupon and high coupon bonds
During the year, Mr. G had the following capital transactions: Long-Term Long-Term Short-Term (28% Basket) (15%...
During the year, Mr. G had the following capital transactions: Long-Term Long-Term Short-Term (28% Basket) (15% Basket) Gains $  9,000 $15,000 $  8,000 Losses 10,000 10,000 12,000 Determine the overall result of the transactions. $4,000 long-term capital gain. $0 long-term capital gain. $1,000 short-term capital loss. $5,000 long-term capital gain.
Are there any special tax rates that apply for Long-term capital gains versus Short Term capital...
Are there any special tax rates that apply for Long-term capital gains versus Short Term capital gains?  
Ostrich, a C corporation, has a net short-term capital gain of $20,000 and a net long-term...
Ostrich, a C corporation, has a net short-term capital gain of $20,000 and a net long-term capital loss of $90,000 during 2019. Ostrich has $425,000 in taxable income from other sources. Prior years’ transactions included the following: 2014 net short-term capital gains $10,000 2015 net long-term capital gains 18,000 2016 net long-term capital gains 15,000 2017 net short-term capital gains 25,000 2018 net long-term capital gains 5,000 Required: a. How are the capital gains and losses treated on Ostrich’s 2019...
Tyler has the following capital gains and losses: Short Term Capital Gain: $10,000 Short Term Capital...
Tyler has the following capital gains and losses: Short Term Capital Gain: $10,000 Short Term Capital Loss: ($4,000) Long Term Capital Gain: $15,000 What is the total capital gains / losses? What is the tax rate?
Why will banks extend short-term working capital financing to companies to which they would not extend...
Why will banks extend short-term working capital financing to companies to which they would not extend long-term credit. a. Conditions are unlikely to deteriorate too badly in the short term. b. Working capital loans are "self liquidating." c. The working capital itself can be used to collateralize the loan. d. All of the above.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Determine the cumulative 15-year 18 kip ESAL’s in the design lane for 2-lane highway for the...
    asked 2 minutes ago
  • Q: Dr.Grimace, the evil dentist, is trying to find out if his patients suffer from periodontal...
    asked 2 minutes ago
  • After collecting data on 19283 dogs, you find that male vallhunds have an average weight of...
    asked 4 minutes ago
  • Research Target Corporation and assess your satisfaction with the company you researched and make recommendations about...
    asked 5 minutes ago
  • Evidence suggests that 70% of FSU students like turtles. Suppose we randomly sampled 15 FSU students....
    asked 5 minutes ago
  • Ulrich challenges the appropriateness of the nearly universal symbolism of the spinning wheel as the marker...
    asked 6 minutes ago
  • Differential Equations: Please try to computer type, if not possible be clear and organize. Thank you...
    asked 6 minutes ago
  • In your opinion, what are the three (3) most important benefits an employer can give to...
    asked 12 minutes ago
  • In a test of the effectiveness of garlic for lowering​ cholesterol, 81 subjects were treated with...
    asked 14 minutes ago
  • How does the 95% confidence interval correspond to the reported conclusion at a 0.05 significance level?...
    asked 15 minutes ago
  • 1) Consider the following Java program, which one of the following best describes "setFlavor"? public class...
    asked 15 minutes ago
  • You've had a chance to learn about Facebook, its model, growth, outlook, strategic assets, and competitive...
    asked 15 minutes ago