A Sovereign Bond Has a Maturity of 15 Years

question 1

Multiple Choice

a sovereign bond has a maturity of 15 years. The bond is best described as a:

• A) perpetual bond.
• B) pure discount bond.
• C) capital market security.

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Definitions:

Accrued Interest

The interest that has accumulated on a bond since the last interest payment up to, but not including, the purchase (or sale) settlement date.

Interest Days

The number of days over which interest is calculated on a loan or financial instrument.

Coupon Bond

A type of bond that pays the holder interest at a fixed rate, typically semi-annually, until maturity when the face value is repaid.

Ask Price

The lowest price at which a seller is willing to sell a financial asset, commodity, or currency in the market at a particular time.