Someone Considering a Bond Purchase Knows Two Things for Certain

question 89

Multiple Choice

Someone considering a bond purchase knows two things for certain ahead of time: the ________ and the ________.

• A) rate of interest; purchase price
• B) default risk; rate of interest
• C) value at maturity; default risk
• D) maturity date; value at maturity
• E) purchase price; maturity date

---

Definitions:

Inefficiency

A situation where resources are not used in the most productive way, leading to waste or a loss of potential value in an economy or system.

Individual Income Taxes

Taxes levied on the income of individuals, with the tax rate often varying according to income levels.

State

A politically organized body of people under a single government, often synonymous with "country" or "nation."

Local Governments

Administrative bodies that govern smaller geographical areas within a country, often responsible for local policies and laws, public services, and community issues.