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grin007 [14]
3 years ago
5

Assuming that everything else is equal, select the bond that most likely pays a higher Interest rate:

Business
1 answer:
never [62]3 years ago
3 0

Answer:

1. a. A bond issued by a government that is engaged in a civil war.

2. 1. The Standard & Poor's 500 is an example of a stock index.

Explanation:

A key part of the interest rate on a bond is the risk attached to the issuer of the bond. A government engaged in civil war is definitely riskier than the stable government of Japan because there is a chance that they might not even pay if they are defeated and a new government comes in. Such a government will therefore issue at a higher rate to cater for this risk.

The Standard and Poor's 500 is indeed an example of a stock index and it is used to gauge the performance of 500 large companies on various exchanges in the U.S. A corporation can either increase, decrease or maintain stock price by issuing stock so option 2 is wrong. Option 3 is wrong as well because trading stock on an organized exchange does not bring in any revenue for the issuing firm.

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