Positive interest rates on bonds in a world
Would there be positive interest rates on bonds in a world with absolutely no risk (no default risk, maturity risk, and so on)? Why would a lender demand and a borrower be willing to pay, a positive interest rate in such a no risk world?
Expert
There would be a positive interest rate in a world free of risk. This is because whether risk is there or not, lenders of money cannot spend during the time the money is loaned. So lenders lose the chance to invest their money for that period of time. To compensate for the cost of losing investment chances while they postpone their spending, borrowers pay on lenders demand, a basic rate of return, and the real rate of interest.
Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of $50 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend sa
Normal 0 false false
How must you hedge discretely?
Why should we assume a deterministic stock price path for an equity option? Answer: Because the forward rate curve is not uniquely determined through the finite set
Who gave the pricing of options to the simulation of random asset paths?
What are the difference between CAPM and APT?
factors of the growth of the margin market in recent years
Explain degree of confidence and the relationship along with deviation.
Company A is a AAA-rated firm wanting to issue five-year FRNs. It determines that it can issue FRNs at six-month LIBOR + 1/8 percent or at the six-month Treasury-bill rate + ½ percent. Specified its asset structure, LIBOR is the preferred index. Comp
18,76,764
1937389 Asked
3,689
Active Tutors
1436681
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!