US Government Bonds Are Considered Safe Investments

question 388

True/False

U.S. government bonds are considered safe investments. Therefore such government bonds usually have a lower interest rate than corporate bonds.

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Definitions:

Cost Of Capital

A company's calculation of the minimum return necessary to justify the cost of a capital project or investment.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of its assets and earnings.

Target Capital Structure

The optimal mix of debt, equity, and other securities that a firm aims to maintain for funding its operations.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment.