ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A corporate bond is issued by a firm and a government bond is issued by the government
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A corporate bond is equity security and a government bond is debt security
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A corporate bond is short term and a government bond is long term
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A corporate bond is debt security and a government bond is an equity security
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Detailed explanation-1: -Corporate bonds are issued by corporations and offer a higher yield relative to a government bond due to the higher risk of insolvency. A bond with a high credit rating will pay a lower interest rate because the credit quality indicates the lower default risk of the business.
Detailed explanation-2: -It acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more).
Detailed explanation-3: -Corporate bonds are bonds issued by companies. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business. Corporate bonds are debt obligations of the issuer-the company that issued the bond.
Detailed explanation-4: -Bonds, issued by a corporation, government, federal agency or other organization to raise capital, are a common type of debt security in which the borrower agrees to pay interest in exchange for the capital raised. The vast majority of bonds have a maturity date that’s set when the bond is issued.
Detailed explanation-5: -Corporate bonds are issued by companies. Municipal bonds are issued by states and municipalities. Government (sovereign) bonds such as those issued by the U.S. Treasury. Agency bonds are those issued by government-affiliated organizations such as Fannie Mae or Freddie Mac. 31-Jul-2022