Questions from Financial Markets

Q: Classify the following transactions as taking place in the primary or secondary

Classify the following transactions as taking place in the primary or secondary markets: a. IBM issues $200 million of new common stock. b. The New Company issues $50 million of common stock in an IPO...

Q: For each of the following situations, identify whether a bond would

For each of the following situations, identify whether a bond would be considered a premium bond, a discount bond, or a par bond. (LG 3-2) a. A bond’s current market price is greater than its face val...

Q: When is a futures or option trader in a long versus a

When is a futures or option trader in a long versus a short position in the derivative contract?

Q: What is the economic meaning of duration?

What is the economic meaning of duration?

Q: Which type of bond—a mortgage bond, a debenture,

Which type of bond—a mortgage bond, a debenture, or a subordinated debenture—generally has the a. Highest cost to the bond issuer? b. Least risk to the bond holder? c. Highest yield to the bond holde...

Q: What are some reasons why interest rate parity may not hold in

What are some reasons why interest rate parity may not hold in spite of the economic forces that should ensure the equilibrium relationship?

Q: One form of the interest rate parity equation appears as 1 + 

One form of the interest rate parity equation appears as 1 + rUSt = (1/St) × (1 + rUKt) × Ft where both the spot and forward rates are expressed in terms of dollars for pounds or direct exchange rates...

Q: What is the difference between an interest rate swap and a currency

What is the difference between an interest rate swap and a currency swap?

Q: What is a swap?

What is a swap?

Q: Consider the following. a. What is the duration of

Consider the following. a. What is the duration of a four-year Treasury bond with a 10 percent semiannual coupon selling at par? b. What is the duration of a three-year Treasury bond with a 10 percent...