Typically, the coupon rate on new bond issues would most likely be high when. cr
ID: 1227232 • Letter: T
Question
Typically, the coupon rate on new bond issues would most likely be high when. credit risk is high the coupon rates of existing comparable bonds are high terms to maturity are short existing market interest rates are low on comparable existing bonds issued by local municipalities rather than corporations Bonds can be characterized most accurately as. equity instruments with a high amount of interest rate risk a legal promise to pay back a loan with interest debt instruments with a high amount of interest rate risk short-term debt instruments representing ownershipExplanation / Answer
3. the coupon rates of existing comparable coupon bonds are high.
As the coupon rate of existing comparable bond is high , then most likely coupon rate of the new bond will also be high.
4. debt instruments with a high amount of interest rate risk.
As bond is a promise to repay , so it's a debt instruments, but since price of bonds fluctuates as interest rate changes, so there is interest rate risk.
If you don't understand anything then comment, I'ill revert back on the same. :)
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