Assuming that everything else is equal, select the bond that most likely pays a
ID: 1181022 • Letter: A
Question
Assuming that everything else is equal, select the bond that most likely pays a higher interest rate:
A. A municipal bond issued by a state
B. A corporate bond issued by an electronics manufacturer
Whic of the following statements about stocks are correct? Check all that apply.
A. An increase in the perceived profitability of a corporation will cause the price of its stock to rise.
B. A corporation can increase the price of its stock by issuing additional shares of stock.
C. Expectations of a recession that will reduce economy-wide corporate profits will casue major stock indexs to decline.
Explanation / Answer
b)
States are generally held to be less risky than companies, so they don't need to offer as large an interest rate to get investors.
Looking at the world at the moment though, I expect there are plenty of people getting money out of gilts and into corporates.
C. Expectations of a recession that will reduce economy-wide corporate profits will casue major stock indexs to decline.