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THE entity that promises to make the interest and maturity payments for a bond i

ID: 2743354 • Letter: T

Question

THE entity that promises to make the interest and maturity payments for a bond issue is called the (shareholder, issuer, investor)

Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date. The entity that promises to make the interest and maturity payments for a bond issue is called the Based on the information given in the following statement, answer the questions that follow: In July 2009, Walmart sold 100 billion yen of five-year samurai bonds. Lead managers in the deal were Mizuho Securities, BNP Paribas, and Mitsubishi UFJ Securities. What type of bonds are these? Who is the issuer of the bonds? BNP Paribas Walmart Mitsubishi UFJ Securities O Government bonds O Municipal bonds Corporate bonds Which of the following statements is true about bonds? interest rates increase, the prices of U.S. Treasuries decline. O When When interest rates increase, the prices of U.S. Treasuries increase. Which of the following types of bonds has the least default risk? O Municipal bonds O Corporate bonds Corporate bonds Treasury bonds

Explanation / Answer

5) Which types of bonds have least default risk - Treasury Bonds (as they are backed by government.)

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1) The entity that promises to make the interest and maturity payments for a bond issue is called the BOND ISSUER. 2) What Type of bonds are there - Corporate bonds (as issued by a corporation, Wal-Mart not by any municipal or government body). 3) Who is the issuer of the bond - Wal-Mart 4) Which of the following statements is true about bonds. When interest rate increases, the price of the US treasuries decline. (interest rates and fixed income securities have inverse relationship. As the interest rate increases the discounting factor increases, hence the present value of the cash flows from the security decrease, resulting in decrease in the price of the security.)

5) Which types of bonds have least default risk - Treasury Bonds (as they are backed by government.)

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