Examlex

Solved

Which of the Two Bonds in Each Example Would You

question 127

Essay

Which of the two bonds in each example would you expect to generally pay the higher interest rate? Explain why.
a.a U.S.government bond or a Venezuelan government bond
b.a U.S.government bond or a municipal bond with the same term and issued by a creditworthy municipality.
c.a 6-month Treasury bill or a 20-year Treasury bond
d.a Microsoft bond or a bond issued by a new recording company


Definitions:

Internal Growth Rate

The maximum rate at which a company can expand its operations using only internally generated funds, without resorting to external financing.

ROE

Return on Equity is an indicator of a company's profitability, demonstrating the amount of profit generated from the shareholders' investments.

ROA

Return on Assets, a financial ratio indicating the profitability of a company relative to its total assets, measuring how effectively the company is using its assets to generate earnings.

Debt-Equity Ratio

The indicator displaying the equivalent contribution of equity and debt to a company's asset base financing.

Related Questions