Which of the following statements is true? As a borrower, you want to issue or s

Question

Which of the following statements is true?
As a borrower, you want to issue or sell bonds for the lowest price possible
As a borrower, you want issue or sell bonds for the highest price possible
A bond’s interest rate will fall when the default risk is lower
As a lender, you want to buy bonds for the highest price possible Which of the following statements is true?
As a borrower, you want to issue or sell bonds for the lowest price possible
As a borrower, you want issue or sell bonds for the highest price possible
A bond’s interest rate will fall when the default risk is lower
As a lender, you want to buy bonds for the highest price possible Which of the following statements is true?
As a borrower, you want to issue or sell bonds for the lowest price possible
As a borrower, you want issue or sell bonds for the highest price possible
A bond’s interest rate will fall when the default risk is lower
As a lender, you want to buy bonds for the highest price possible

Explanation / Answer

As a lender, one wants to buy bonds for the lowest price possible because one wants the highest interest rate on savings. As a borrower, one wants to sell bonds for the highest price possible so that one can pay the lowest interest rate possible. Greater the default risk, lower the price of bonds implies a higher rate of interest.

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