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Finance INVESTMENT (urgent please) 1) What does market segmentation theory say about the term structure of interest rates? Assume a market is dominated by pension
Finance INVESTMENT (urgent please)
1) What does market segmentation theory say about the term structure of interest rates? Assume a market is dominated by pension funds whose liability is long term. If market segmentation theory is correct, describe the shape of the yield curve in the market. 2) Does a cap on a floating rate bond benefit the issuer or bondholder? Explain. 3) What is the relationship between coupon rates and bond duration? Explain. 4) The sensitivity of a bond's price to a change in its yield will be higher when the yield to maturity at which the bond currently is selling is higher. True or false? Explain. 5) Two bonds have identical times to maturity and coupon rates. One is callable at 105, the other at 110. Which should have the higher yield to maturity? ExplainStep by Step Solution
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