Asked by
pooja sangaraju
on Nov 16, 2024
Verified
Which of the following statements about the term of a bond is correct?
A) Term refers to the various characteristics of a bond, including its interest rate and tax treatment.
B) The term of a bond is determined entirely by its credit risk.
C) The term of a bond is determined entirely by how much sales commission the buyer of the bond pays when he or she purchases the bond.
D) Interest rates on long-term bonds are usually higher than interest rates on short-term bonds.
Term of a Bond
The length of time until a bond's maturity date, when the principal amount of the bond is due to be paid to the bondholder.
Interest Rates
The cost of borrowing money, typically expressed as a percentage of the amount borrowed, that lenders charge borrowers for the use of their funds.
- Elucidate on the elements influencing the interest rates of bonds, such as the issuer's economic health and the period of the bond.
Verified Answer
JL
Learning Objectives
- Elucidate on the elements influencing the interest rates of bonds, such as the issuer's economic health and the period of the bond.