Question

You are a corporate bond portfolio manager working for Endicott Industries’ pension fund. Your boss has...

You are a corporate bond portfolio manager working for Endicott Industries’ pension fund. Your boss has asked you to analyze a possible investment in the bonds of Kirkwood Pipe, a pipe manufacturer. The company’s bonds are rated B2/B-. These bonds are considered

A.

Hybrid bonds

B.

Medium grade bonds

C.

High-yield bonds

D.

Investment grade bonds
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The stated bonds are rated B2/B-. These bonds are highly speculative, with high degree of risk. Such bonds offer higher return and hence are High Yield Bonds.

The answer is option B

Other choices:

Hybrid bonds have the combination of characteristics of both debt and equity (like convertible bonds)

Medium grade bonds are those rated A1 to Baa3 Or A+ to BBB-

Bonds rated AAA to BBB- are generally treated as investment grade. The sted bonds do not belong to that category.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 15 % 32% Bond fund (B) 9 % 23% The correlation between the fund returns is 0.15. 1. What would be the investment proportions...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 5%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock Fund (S) 20% 35% Bond Fund (B) 11% 15% The correlation between the fund returns is 0.09. You require that your portfolio yield an expected...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 5%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 17% 30% Bond fund (B) 11% 22% The correlation coefficient between the fund returns is 0.10. You require that your portfolio yield an...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long term government and corporate bond fund, and the third is a T-Bill money market fund that yields a sure rate of 4.8%. The probability distributions of the risky funds are: expected return standard deviation Stock Fund ( S )---------18%-------------38% Bond Fund ( B )----------9----------------32 the correlation between the fund returns is .13 Standard deviation of optimal risky portfolio is 30.92%....
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 21 % 36 % Bond fund (B) 13 % 22 % The correlation between the fund returns is 0.13. a-1. What are the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8 percent. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) .20 .30 Bond fund (B) .12 .15 The correlation between the fund returns is 0.10. What is the reward-to-variability ratio of the...
Suppose that you want to create a portfolio that consists of a corporate bond​ fund, X,...
Suppose that you want to create a portfolio that consists of a corporate bond​ fund, X, and a common stock​ fund, Y. For a​ $1,000 investment, the expected return for X is $ 75 and the expected return for Y is $ 95. The variance for X is 1 comma 825 and the variance for Y is 10 comma 225. The covariance of X and Y is 4 comma 316. Complete parts​ (a) through​ (d). a. Compute the portfolio expected...
Assume that as an investment manager at Oman investment fund; you hold a large bond portfolio...
Assume that as an investment manager at Oman investment fund; you hold a large bond portfolio of Omani government bonds (long term) and T-bills (short-terms). The interest rates are currently falling due to Covid-19. i. How your bond portfolio would be affected by falling interest rates? ii. How your t-bills portfolio would be affected by falling interest rates? iii. Which portfolio is more sensitive?
You are an investment manager considering two mutual funds. The first is an equity fund and...
You are an investment manager considering two mutual funds. The first is an equity fund and the second is a long-term corporate bond fund. It is possible to borrow or to lend limitless sums safely at 1.25%pa. The data on the risky funds are as follows: Fund Expected return Expected standard deviation Equity Fund 8% 16% Bond Fund 3% 5% The correlation coefficient between the fund returns is 0.10 a          You form a risky portfolio P that is equally weighted...
. A pension fund manager is considering three mutual funds. The first is a stock fund,...
. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.9%. The probability distributions of the risky funds are: Stock fund (S) 10% 39% Bond fund (B) 5% 33% The correlation between the fund returns is 0.0030. What is the expected return and standard deviation for the minimum-variance portfolio...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT