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Corporate liquidity may be declining because revenues are declining. If a company isn't selling enough product, then they will likely borrow money, which reduces liquidity.

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If 10-year T-bonds have a yield of 6.2 10-year corporate bonds yield 7.9 the maturity risk premium on all 10-year bonds is 1.3 and corporate bonds have a 0.4 liquidity premium versus a zero liquidity?

To find the maturity risk premium on corporate bonds, we can use the following formula: Corporate bond yield = T-bond yield + Maturity risk premium + Liquidity premium. Given the yields, we have: 7.9% = 6.2% + 1.3% + 0.4%. This indicates that the maturity risk premium accounts for the difference in yields between T-bonds and corporate bonds, confirming that the corporate bonds include both the maturity risk premium and the liquidity premium.


In what two ways do security markets provide liquidity?

Security markets provide liquidity to companies through shares and corporate bonds. When people buy shares, the companies can use those as capital to expand various ventures.


Why has the primary sector been declining?

The Primary Sector Is Declining Because We Are Running Out Of Natural Materials Such As Oil


Why might a profitable business face liquidity problems?

No liquidity


Differentiate bank treasury and corporate treasury?

A bank treasury is focused on a) Central bank liquidity and reserve requirements b) Managing banks internal liquidity challenges (shortfall as well as surplus) c) Earning a respectable return on excess cash and c-ii) generating excess cash by setting the right pool rates for depositors and bank branches d) Tracking the Interest Rate mismatch risk e) Covering ALM exposure in both local currency as well as Foreign Exchange books f) Providing support for cross border trade transactions by quoting appropriate FX rates. A corporate treasury is generally not concerned with (a) above. Most corporate treasuries are focused on cash management and some liquidity and financing activities but they are dependent on wholesale lenders (bank) rather than retail depositors. Corporate treasurers also have less of a regulatory reporting burden compared to bank treasuries

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In what two ways do security markets provide liquidity?

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Why has the primary sector been declining?

The Primary Sector Is Declining Because We Are Running Out Of Natural Materials Such As Oil


How would your corporate insurance cover if you rented a vehicle declining rental insurance and vehicle was damaged as it hit a concrete pole without harming the pole?

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Why might a profitable business face liquidity problems?

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