rvavellana

Three years ago, an investor bought XYZ bonds at Tk. 1,025 each. Presently, these bonds are valued at Tk. 987 each in the market. Indicate the likely reasons why the price of the bonds could have changed from the time the investor purchased them three years ago.

2. What's the benefit of a 'make-whole call provision' in bonds for both the lender and borrower?

3. Between a callable bond (Security C) and a mortgage-backed security (Security M), both with 6.25% rates and 4-year terms, and considering falling market interest rates, which should a risk minimizer investor pick for a 6-month horizon? Why?

4. If the market rate changes by 125 basis points from the current 7.875%, which of Bond F (0% coupon), Bond Z (6% coupon), and Bond 0 (coupon of T-bill rate + 1.5%) would face the most and least impact on their value? Explain why.