Economics Homework Help

1. Discuss the main types of bonds based on their coupons.
Discuss the advantages and disadvantages of each type in a high
interest rates environment where market participants expect that
rates will go down in the medium term.
Discuss the most appropriate type (based on the coupon) of bond to
hold if you wanted to minimise re-investment risk.

2. Discuss the functioning and merits of callable and puttable bonds from an investor’s perspective. Discuss how the price of a puttable bond will differ from the price of a similar, plain vanilla bond and the main determinants of this price difference. In which market environment does the issuance of a callable bond make more sense from a corporate issuer’s perspective?

3. “Credit ratings are not very useful as they are merely a static appraisal of the financial health of an issuer at a specific point of time and are essentially backwards looking”. Discuss this statement with reference to the credit ratings assignment process and traditional credit analysis.

about 400-500 words for each question

Please use the reference attached below.