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Evaluate the validity of each of the following statements. Use verbal, diagrammatic and/or mathematical tools where applicable. a) Secured bonds have higher yields than otherwise
Evaluate the validity of each of the following statements. Use verbal, diagrammatic and/or mathematical tools where applicable. a) Secured bonds have higher yields than otherwise identical non-secured bonds. (3 marks) b) According to the CAPM, the expected return on risky securities should exceed the risk-free rate. (3 marks) c) A horizontal yield curve (term structure of interest rates) implies market expectations that interest rates will remain unchanged in the future. (3 marks)
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