Which of the Following Best Illustrates Why a Bond Is

question 57

Multiple Choice

Which of the following best illustrates why a bond is a type of loan?

• A) When a company issues a bond, the buyer of that bond becomes a part owner of the issuing company.
• B) Federal and state governments issue bonds to finance long-term projects.
• C) When an investor buys a bond from an issuer, the investor is giving money to the issuer, with the assurance it will be repaid at a date in the future.
• D) The issuers of bonds regularly pay interest on the face value of the bond to the buyers of those bonds.

Recognize the conditions under which a defense of self-defense is legally justified.

Identify conditions for medical procedures not to be classified as battery.

Understand the concept and characteristics of common resources.

Recognize the difference between common resources and private resources and their impact on resource allocation.

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Definitions:

Average Duration

The weighted average time it takes for an investor to receive all cash flows from a bond or a portfolio of bonds, factoring in the present value of those cash flows.

Perpetuity

A type of annuity that lasts forever, providing payments that continue indefinitely.

Yield

The income return on an investment, expressed as a percentage of the investment’s cost or current market value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, often noted in years.