chapter 4 questions

chapter 4 questions - MGT 3440 Chapter 4 questions and...

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MGT 3440 Chapter 4 questions and stock quotes The reason the two securities wouldn’t sell at the same rate is because they are two different types of securities. Bonds mature at a rate over 10 years; they take much longer but pay a better interest. The Treasury note has 4 years left of its 5 year term, so you wouldn’t receive the same amount back as you would the bond. The default risk is the possibility that a firm will not be able to repay the principal and interest on a bond in accordance with the bond indenture. This concept is extremely important to a bond investor, this could be a deciding factor when purchasing the bond, because if the firm might not be able to repay, it wouldn’t be a good investment.
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