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Why is change in the required yield for preferred stock likely to have a greater impact on price than a change in required yield for bonds?
Idasnurse
I don't know
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∙ 16y ago
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Why is a change in required yield for preferred stock likely to have a great impact on price than a change in required yield for bonds?
Bonds have a maturity date while most preferred stocks are perpetual, which means they never mature. No matter the change in interest rates before maturity, bonds will eventually be worth par or 100 when they mature. So interest rate changes may affect the price in the near term but the investor will know what s/he will get at maturity. Since preferred stocks never mature, there is no value in the future that anchors the price of the bond. Therefore, if interest rates go up, the value of the preferred may be permanently impacted by a better interest rate than the stated dividend yield. Thus, the price of the preferred stock will be volatile than that of a bond.
Will an increase in inflation have a larger impact on the price of a bond or preferred stock?
The preferred stock
Any change in its beta is likely to affect the required rate of return on a stock which implies that a change in beta will likely have an impact on the stocks price?
False
How do you reduce the impact of change?
Limit the possibilities of the change, so therefore the impact will not effect as much,
Define and give an example of the income effect?
The income effect is the change in an individuals or economy's income and how that change will impact the quantity demanded. For example, after a raise, John Doe would desire more products, because he has greater disposable income.
If a bicycle and a massive truck have a head-on collision upon which vehicle is the impact force greater which vehicle undergoes the greater change in its motion?
which vehicle is the impact force greater? the bicycle.which vehicle undergoes the greater change in its motion? the bicycle
What is meant by an environmental impact statement?
An Environmental Impact Statement is required by companies when starting a factory or making a change to the manufacturing processes. It is meant to outline what impact the change will have on the environment.
Why is a change in required yield for preferred stock likely to have a great impact on price than a change in required yield for bonds?
Bonds have a maturity date while most preferred stocks are perpetual, which means they never mature. No matter the change in interest rates before maturity, bonds will eventually be worth par or 100 when they mature. So interest rate changes may affect the price in the near term but the investor will know what s/he will get at maturity. Since preferred stocks never mature, there is no value in the future that anchors the price of the bond. Therefore, if interest rates go up, the value of the preferred may be permanently impacted by a better interest rate than the stated dividend yield. Thus, the price of the preferred stock will be volatile than that of a bond.
Will an increase in inflation have a larger impact on the price of a bond or preferred stock?
The preferred stock
Was the domestic impact of the first world war greater in Britain or in Germany?
impact was greater for Britain
Any change in its beta is likely to affect the required rate of return on a stock which implies that a change in beta will likely have an impact on the stocks price?
False
What is the impact of speed on road accidents and fatalities?
the greater the speed the greater the impact (more serious situation of the person impacted).
Why is the remaining time to maturity an important factor in evaluating the impact of a change in yield to maturity on bond prices?
The longer the time period remaining to maturity, the greater the impact of a difference between the rate the bond is paying and the current yield to maturity (required rate of return). For example, a two percent ($20) differential is not very significant for one year, but very significant for 20 years. In the latter case, it will have a much greater effect on the bond price.
Why is the remaining time to maturity an important factor in evaluating impact of a change in yield to maturity on bond prices?
The longer the time period remaining to maturity, the greater the impact of a difference between the rate the bond is paying and the current yield to maturity (required rate of return). For example, a two percent ($20) differential is not very significant for one year, but very significant for 20 years. In the latter case, it will have a much greater effect on the bond price.
Which has greater impact speaking or listening?
speaking
What was the greatest impact of the Silk Road?
Not true it was the greatest impact. It is just part of history. There are many things that have made a greater impact.
You're driving decision and action not only impact you and your world they also impact?
The greater good for others
