The following is a Table on the yield of several global government bonds Coupon
ID: 1141832 • Letter: T
Question
The following is a Table on the yield of several global government bonds
Coupon (%)
Country
Maturity
Yield (%)
4.25
Australia
10
1.99
0.5
France
10
0.15
1.50
U.K.
10
0.73
1.50
U.S.
10
1.62
What can best explain the low yield on 10-year French bonds?
a. It is much safer than US Treasury securities
b. The European Central Bank has adopted a negative interest rate policy
c. Investors avoided investing in French bonds
d. the supply of French bonds is low
Coupon (%)
Country
Maturity
Yield (%)
4.25
Australia
10
1.99
0.5
France
10
0.15
1.50
U.K.
10
0.73
1.50
U.S.
10
1.62
Explanation / Answer
Option c.
Yield to maturity: It is the approximated average return until it matures
Coupon rate: It is the amount of interest income it earns each year based on its face value
As the Bank of France is linked to European central and because of negative interest rates the yield of bonds is lower than other government bonds.
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