Question

You would expect a bond of an Eastern European government to pay the same interest rate as compared to a bond of the U.S. government interest rate as compared to a bond that repays the principali You would expect a bond that repays the principal in year 2020 to pay a lower year 2040. You would expect a bond from a software company you run in your garage and a bond from Coca-Cola to pay different interest rates because of differences in the bonds' credit risks interest rate as compared to a bond issued by New York State. You would expect a bond issued by the federal government to pay a higher Save & Continue Continue without

The options for a are "the same", "a higher", or "a lower"

The options for b are "the same", "a higher", or "a lower"

The options for c are "terms to maturity", "credit risks", or "tax treatment"

The options for d are "the same", "a higher", or "a lower

Answer 1

A> a higher interest rate because there might be a risk associated of default perceived which happens from the bonds of Government in this case Eastern European.

B> a lower interest rate because of term of maturity here is shorter hence less lower interest, longer term refers to higher interest rate and vice - versa.

C>Credit Risks because the the software here will pay a higher interest rate than the coca cola bonds because Coca-Cola is already an established company and your garage run software company is not , that will result in higher credit risks.

D>a higher interest rate because here the investors doesn't need to pay the federal government income tax .