Question

1) Which of the following assign ratings for corporate bonds in the United States? _______

A) The Securities and Exchange Commission

B) The Office of Debt Management

C) Private companies such as Moody’s and Fitch

D) The issuing companies

2) If you deposit $1,000 in a savings account at an annual rate of 8%, how much will you have in the account at the end of three years? Assume compounding of annual interest and no withdrawals. _______

A) $1,166 B) $1,240 C) $1,260 D) $1,320

3) In the financial markets, a bond issuer is: _______.

A) the borrower

B) the lender

C) the lender or the borrower depending on the use of the funds

D) dependent on the rating agency’s report

4) If you purchased a U.S. Treasury at a price of $105:08 with a par amount of $5,000, how much did you pay? _______

A) $5,000 B) $5,250 C) $4,762 D) $5,262

5) If a government's outlays exceed its revenues, the government is running a: _______.

A) deficit and is a net saver of funds

B) surplus and is a net borrower of funds

C) deficit and is a net borrower of funds

D) surplus and is a net saver of funds

Answer 1

Please see the below answers :

Q,-1

The correct option is "C"

In the U.Sthe three main bond rating companies are standard and Poor's Global Ratings, Moody's Investors Service and Fitch Ratings. Each one of them uses a special and different letter which are futher based on rating criteria to quickly pass the information to investors or users or whether a bond involves a low or high default risk or whether the issuer is financially sound and stable.

Q-2

Principal amount - $1000

Rate - 8%

Time - 3 years

A= Final Amount

Compounding annually ,given in question

Formula of Compound interest

A = P (1 + R/N)^nt

	=	number of times interest applied (Compounding annually)
	=	number of years (3 years)

Compoujd interest = $1000 (1 + 8/100)^1×3

^{Final amount= $ 1000 × 1.26}

^{Final amount (After three years)= $ 1260.00}

^{correct answer is option C}

^​Q- 3

A 3- The correct answer is option " A "

The Borrower

The bond issuer is the borrower and on the other hand the purchaser is the lender. At the maturity of the bond, bond issuers pay back the amount to the holder of the bond the principal amount.

Q- 5

A) The correct answer is

A-5) The correct answer is option "D°

A surplus balance shows a net savings or net financial asset building status which are as, (flowing of money is more than is flowing out into the sector) and on the other hand the deficit balance shows a net borrowing or net financial asset reducing status which are as (more funds are flowing out from the sector than is flowing in).

Q - 4

A- 4 ) The correct answer is option is "A" - $5000