ECONOMICS (CBSE/UGC NET)

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ECONOMICS

SAVING AND INVESTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Provides fixed interest payments for a set period of time(Bonds are issued by governments and corporations when they want to raise money. By buying a bond, you’re giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interest payments along the way, usually twice a year.)
A
money
B
stock
C
bond
D
mutual fund
Explanation: 

Detailed explanation-1: -Bonds are debt instruments in which the investor loans money to an entity. The entity borrows money at a fixed interest rate for a specific time duration. Such an entity can be government, banks or corporates. Hence, when the government issues bonds, they are known as government bonds.

Detailed explanation-2: -Treasury bonds are long-term bonds with a maturity of 30 years. T-Bonds provide semiannual interest payments and usually have $1, 000 face values. A 30-year Treasury bond was issued on February 15, 2023, with a rate of 3.625%.

Detailed explanation-3: -Step-up bonds provide investors with periodic interest payments while allowing them the chance to earn a higher rate in the future. Some bonds are single step-up bonds that have only one increase in the coupon rate, while others may have multi-step increases.

Detailed explanation-4: -The coupon rate is the rate of interest the bond issuer will pay on the face value of the bond, expressed as a percentage.1 For example, a 5% coupon rate means that bondholders will receive 5% x $1, 000 face value = $50 every year. Coupon dates are the dates on which the bond issuer will make interest payments.

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