Asked by
Rishi Prasad
on Dec 17, 2024Verified
Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?
A) Corporate bond, municipal bond, U.S.government bond
B) Corporate bond, U.S.government bond, municipal bond
C) Municipal bond, U.S.government bond, corporate bond
D) U.S.government bond, municipal bond, corporate bond
Corporate Bond
A type of debt security issued by corporations to raise capital, where the corporation promises to repay the principal along with interest at a specified future date.
Municipal Bond
A debt security issued by municipalities to finance public projects, such as roads and schools, typically offering tax-free interest payments to investors.
U.S. Government Bond
A debt security issued by the United States Department of the Treasury to support government spending, considered a low-risk investment.
- Comprehend the correlation between risk and yield in investment decisions.
- Comprehend the impact of fiscal policies on investment choices and interest rates.
Verified Answer
ZH
Learning Objectives
- Comprehend the correlation between risk and yield in investment decisions.
- Comprehend the impact of fiscal policies on investment choices and interest rates.