Which of the Two Bonds in Each Example Would You

question 74

Essay

Which of the two bonds in each example would you expect to pay the higher interest rate? Explain why.
a. a Canadian government bond or a bond issued by the government of Guatemala
b. a government of Canada bond or a municipal bond of the same face value and term
c. a 6-month Treasury bill or a 20-year bond
d. an Air Canada company bond or a bond issued by a new high tech start-up

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Definitions:

Self-Discipline

The ability to control one's feelings and overcome one's weaknesses; the ability to pursue what one thinks is right despite temptations to abandon it.

Conscientiousness

A personality trait characterized by being diligent, careful, thorough, self-disciplined, and responsible.

Openness to Experience

A personality dimension describing individuals who engage in open and imaginative thinking, are curious, and appreciate new experiences.

Intellect

The ability to learn, understand, and apply knowledge, often seen as a component of intelligence.