-Suppose you are the owner of a large portfolio of long-term bonds in the health care...

90.2K

Verified Solution

Question

Finance

-Suppose you are the owner of a large portfolio of long-termbonds in the health care industry and you believe that in the nextthree years, all healthcare will be socialized to the publicsector. You anticipate that the profits of most healthcarecompanies will suffer immensely from this new path. If the marketagrees with your assessment of the future, what would youanticipate would be the near term consequences for your bondportfolio? Why would this happen and why now, when the change tosocialized medicine is three years away? How could you use optionson these bonds to guard against lose?

Answer & Explanation Solved by verified expert

4.4 Ratings (597 Votes)

If the profit are anticipated to suffer immensely the bonds will become more risky to the investor This is because bonds required period interest payments and repayment of face value on maturity Declining See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member