ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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easily the most widely followed financial markets in the United States.
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the markets where foreign exchange rates are determined.
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the markets where interest rates are determined.
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the markets where all borrowers get their funds.
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Detailed explanation-1: -The bond markets are important because they are the markets where interest rates are determined. The bond market broadly describes a marketplace where investors buy debt securities that are brought to the market by either governmental entities or publicly-traded corporations.
Detailed explanation-2: -The bond market can help investors diversify beyond stocks. Some of the characteristics of bonds include their maturity, their coupon (interest) rate, their tax status, and their callability. Several types of risks associated with bonds include interest rate risk, credit/default risk, and prepayment risk.
Detailed explanation-3: -Bonds are more beneficial for investors who want less exposure to risk but still want to receive a return. Fixed-income investments are much less volatile than stocks, and also much less risky. Again, as mentioned earlier, stocks are subordinated to bonds in the event of a liquidation.
Detailed explanation-4: -Bond prices have an inverse relationship with interest rates. This means that when interest rates go up, bond prices go down and when interest rates go down, bond prices go up.
Detailed explanation-5: -A bond market is a marketplace for debt securities. This market covers both government-issued and corporate-issued debt securities. It allows capital to be transferred from savers or investors to issuers who want funds for projects or other operations.