Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...

Question

Question

Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...

Which of the following bonds will generally have the lowest default risk?

a.) Bonds issued by the US Treasury

b.) Municipal bonds

c.) Corporate bonds of large companies

d.) Corporate bonds of small companies

e.) All of these bonds will have similar default risks

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Risk-free securities are government securities, which repayment is guaranteed by the federal government. Since the repayment is guaranteed it is considered to be default risk free.

Hence, correct option is a. Bonds issued by the US Treasury.

Add a comment

Answer 2

Similar Homework Help Questions

Which 2 assets generally have the lowest correlation? Treasury Bonds and Corporate Bonds US Stocks and...

Which 2 assets generally have the lowest correlation? Treasury Bonds and Corporate Bonds US Stocks and Foreign Stocks Airline Stocks and Auto Stocks Technology Stocks and Treasury Bonds
bonds with relatively low risk of default are called 1) Bonds with relatively low risk of...

bonds with relatively low risk of default are called 1) Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) a above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade C) high quality; lower grade B) investment grade; junk bonds D) high quality; junk bonds 2) Which of the following bonds are considered to be default-risk free? A) municipal bonds...
3. Corporate bond yield - Treasury bond yield = C6 A. Municipal bond yield B. Hypothetical...

3. Corporate bond yield - Treasury bond yield = C6 A. Municipal bond yield B. Hypothetical yield curve C. Default risk premium D. Default risk premium + liquidity premium E. Municipal bond yield - default risk premium 4. Which of the following statements is true about municipal bonds? C7 A. Municipal bondholders are safer than corporate bonds B. Municipal bonds can be issued by federal, state and local governments C. Municipal bonds have a comparable coupon rate to corporate bond...

Which of the following statements are TRUE? A) A decrease in default risk on corporate bonds...

Which of the following statements are TRUE? A) A decrease in default risk on corporate bonds lowers the demand for these bonds, but increases the demand for default-free bonds. B) The expected return on corporate bonds decreases as default risk increases. C) A corporate bond's return becomes less uncertain as default risk increases. D) As their relative riskiness increases, the expected return on corporate bonds increases relative to the expected return on default-free bonds. Answer: B WHY ACD FALSE?
If the default risk of corporate bonds decreases, relative to US Treasury bonds, then the equilibrium...

If the default risk of corporate bonds decreases, relative to US Treasury bonds, then the equilibrium yield on corporate bonds will_____ and the equilibrium yield on US Treasury bonds will _____. Group of answer choices rise; rise rise; fall fall; rise fall; fall
Which of the following has the lowest volatility in history? A. Treasury Bills B. S&P 500...

Which of the following has the lowest volatility in history? A. Treasury Bills B. S&P 500 C. Large Stocks D. Corporate Bonds E. Small Stocks

Over the past 89 years, we have observed that investments with the highest average annual returns...

Over the past 89 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of annual returns. This observation supports the notion that there is a positive correlation between risk and return. Which of the following answers correctly ranks investments from highest to lowest risk (and return), where the security with the highest risk is shown first, the one with the lowest risk last? a. Large-company stocks, small-company stocks, long-term...
QUESTION 25 Which of the following has the most default risk? O a. 30-year Treasury bond....

QUESTION 25 Which of the following has the most default risk? O a. 30-year Treasury bond. O b. GNMA. C. XYZ Small Cap Corporate bond - AA rated. d. Central City Municipal General Obligation Bond - BBB+ rated. QUESTION 26 Assume that the 1-year rate is 4% and the 2-year rate is 6%. Based on the expectations theory, what is the implied 1-year rate, 1 year from today? a. 4%. b.6%. O c. 8%. O d. 9%.
If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk pr

If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?a. 1.00%b. 1.10%c. 1.20%d. 1.30%e. 1.40%

Just the answer please 13. Bonds with relatively low risk of default are called securities and...

Just the answer please 13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade bonds....

Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...

Homework Answers

Add Answer to:
Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...

Post as a guest

Earn Coins

Which 2 assets generally have the lowest correlation? Treasury Bonds and Corporate Bonds US Stocks and...

bonds with relatively low risk of default are called 1) Bonds with relatively low risk of...

3. Corporate bond yield - Treasury bond yield = C6 A. Municipal bond yield B. Hypothetical...

Which of the following statements are TRUE? A) A decrease in default risk on corporate bonds...

If the default risk of corporate bonds decreases, relative to US Treasury bonds, then the equilibrium...

Which of the following has the lowest volatility in history? A. Treasury Bills B. S&P 500...

Over the past 89 years, we have observed that investments with the highest average annual returns...

QUESTION 25 Which of the following has the most default risk? O a. 30-year Treasury bond....

If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk pr

Just the answer please 13. Bonds with relatively low risk of default are called securities and...

Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...

Homework Answers

Add Answer to: Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...

Post as a guest

Earn Coins

Add Answer to:
Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...