Questions from Financial Markets


Q: Why do ratings agencies assign ratings to commercial paper?

Why do ratings agencies assign ratings to commercial paper?

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Q: Explain how the expected interest rate in one year depends on your

Explain how the expected interest rate in one year depends on your expectation of economic growth and inflation.

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Q: Explain how investors’ preferences for commercial paper change during a recession.

Explain how investors’ preferences for commercial paper change during a recession. How would this reaction affect the difference between commercial paper rates and T-bill rates during recessionary per...

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Q: Based on what you know about repurchase agreements, would you expect

Based on what you know about repurchase agreements, would you expect them to have a lower or higher annualized yield than commercial paper? Why?

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Q: If bond yields in Japan rise, how might U.S

If bond yields in Japan rise, how might U.S. bond yields be affected? Why?

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Q: Explain the use of a sinking-fund provision. How can

Explain the use of a sinking-fund provision. How can it reduce the investor’s risk?

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Q: What are protective covenants? Why are they needed?

What are protective covenants? Why are they needed?

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Q: Explain how the credit crisis adversely affected many other people and institutions

Explain how the credit crisis adversely affected many other people and institutions beyond homeowners and mortgage companies.

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Q: Explain the use of call provisions on bonds. How can a

Explain the use of call provisions on bonds. How can a call provision affect the price of a bond?

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Q: Explain the use of bond collateral and identify the common types of

Explain the use of bond collateral and identify the common types of collateral for bonds.

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