Which of the following bonds will have the lowest interest rate? a. a new start-up company...
Which of the following bonds will have the lowest interest rate?
|
a. |
a new start-up company selling inexpensive at-home COVID-19 tests. |
|
b. |
The city government of Kansas City. |
|
c. |
A U.S. Treasury Bond that matures in 2025. |
|
d. |
A U.S. Treasury Bond that matures in 2030. |
Homework Answers
Correct option is (c).
The lower the default risk and/or the lower the maturity date of the bond, the less riskier the bond is, so the lower its interest rate. The US treasury bond is considered to be default free, and a bond maturing in 2025 has lower interest rate risk than one maturing in 2030.
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Which of the following bonds will have the lowest interest
rate?
a.
a new start-up company...
QUESTION 2: 4 POINTS Suppose initially, the interest rate on U.S. Treasury bonds is equal to...
QUESTION 2: 4 POINTS Suppose initially, the interest rate on U.S. Treasury bonds is equal to that on bonds issued by Greek government. In 2010 and 2011, the government of Greece risked defaulting on its bonds due to a severe budget crisis. (1) Using bond market graphs, graphically show the effects on U.S. Treasury bonds and comparable-maturity Greek bonds. (2 points) Greek government bonds U.S. Treasury bonds (2) What is the impact on prices and interest rates of Greek bonds...
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1. Two $1,000 par value bonds both with 6% coupon rate payable annually are selling at...
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6. A floating rate bond A. Typically pays interest that varies periodically with changes in some...
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Which of the following bonds will generally have the lowest default risk? a.) Bonds issued by...
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1)If interest rates suddenly ________, those existing bonds that have a call feature are ________ likely...
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According to treasurydirect.gov, 30-Year treasury bonds earning 2.375% interest were issued on 11/15/2019 (CUSIP 912810SK5). These treasury bonds were offered in multiples of $100 (par or face value). Also, according to treasurydirect.gov, treasury bonds pay interest on a semi-annual basis. a. Lets say that you bought one of these treasury bonds. Every time you received an interest payment from this bond, you placed it in a savings account earning a yearly nominal 2.375% interest rate compounded semi-annually. In 30 years,...
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