The purpose of the(se) post(s) is to create discussion on a current topic related to the class (maybe not exactly from the chapter we are covering, though). You are required to post something for a...

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The purpose of the(se) post(s) is to create discussion on a current topic related to the class (maybe not exactly from the chapter we are covering, though). You are required to post something for a grade. Simply replying "I agree" or similar will get you less credit. To get the most credit, and to make this discussion worthwhile, please put some thought into what you say (you can post more than once, if you want). You can post a comment, reference an article, or add some other tidbit of information that you find interesting and relevant. Make this insightful - and also RESPECTFUL - do not bash anything anyone says. Keep to finance.


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Topic - Return & Risk:


Interest rates in the current economy/world are at historic lows. This leads to firms being able to issue debt at very low costs. One such example is Amazon who recently secured the lowest cost of borrowing ever in the US corporate bond market. Read the attached article and comment below. Note the fact that Amazon's risk premium above similar US-Treasury debt was less than 0.2%, indicating that the risk that investors' see in Amazon is very low. You can add your thoughts, other articles, examples, etc. There are other recent examples of low rates at longer maturities or other unprecedented events, etc. that you can add.




Amazon secures record low borrowing costs | Financial Times
Answered Same DayJun 29, 2021

Answer To: The purpose of the(se) post(s) is to create discussion on a current topic related to the class...

Kalaivani answered on Jun 30 2021
135 Votes
Coronavirus pandemic has led large economies and corporations to hit the rock bottom. The world has witnessed the lowest economic growth, international and domestic trade, crude oil prices and highest unemployment, loan defaulters, etc. amid all these, there is still a blessing i.e. availability of low-cost debt for borrowers, more particularly for corporations.
The interest rate for debt is based on simple market demand and supply. In this case, the demand for debt is from the corporation and the supply from individuals. During difficult times like this, individuals with the fear of economic uncertainty tend to save more than to spend, leading to an increased supply of money to the financial institution. The other side of saving is investing in blue-chip instruments with...
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