You Are Considering Two Bonds

question 55

True/False

You are considering two bonds. Both are rated double A (AA), both mature in 20 years, both have a 10 percent coupon, and both are offered to you at their $1,000 par value. However, Bond X has a sinking fund while Bond Y does not. This is probably not an equilibrium situation, as Bond X, which has the sinking fund, would generally be expected to have a higher yield than Bond Y.

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Definitions:

Escheat To The Crown

A legal process where unclaimed or ownerless land and property revert back to the state or monarch.

Electronic Commerce

The act of purchasing and selling products and services, or the transfer of money and information, primarily through the internet.

Telecommunications Technologies

Tools and devices used to transmit information over distances, such as telephones, the internet, and satellite systems.

Digitized Offerings

Products or services that are converted into digital form to be accessed or purchased online.