The Company Brett Works for Has Just Acquired a Regional

question 114

Essay

The company Brett works for has just acquired a regional clothing store chain. The chain has a very strong reputation among consumers in the states in which it operates. The acquired company owns several private-label brands. Brett has been asked to prepare a brief about the options for retaining the private-label brands that the chain had been selling. What are the key points Brett should include?

---

Definitions:

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, indicating the price change in percentage terms for a yield move of one percent.

Macaulay Duration

A measure of the weighted average time until a bond's cash flows are paid back, used to assess interest rate risk.

Yield To Maturity

The total return anticipated on a bond if held until it matures.

Interest-Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates, affecting debt securities inversely with respect to their prices and yields.