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10 July, 21:13

Nazim wants to include putable bonds in his investment portfolio. Nazim is likely to put the bonds when: a. He has reinvestment options with higher yields b. He has reinvestment options with lower yields Nazim also recently bought bonds with a clause stating that interest will be paid based on the inflation rate. When the inflation rate increases, the interest on the bonds will also increase. Nazim has invested in

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  1. 10 July, 21:30
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    1). Answer : - Option b). He has reinvestment options with higher yields.

    2). Answer : - Nazim has invested in purchasing power bonds / Indexed bonds.
  2. 10 July, 21:32
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    He has reinvestment options with higher yields

    Income bonds

    Explanation:

    Nazim is likely to put the bonds when he is in need of money and as such will go for a reinvestment option having a higher yield. Also, if Nazim recently bought bonds with a clause stating that interest will be paid based on the inflation rate, then Nazim has invested in income bonds, because income bond interest rate is dependent on inflation rate; as inflation rate increases, interest on the bond also increases.
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