Which of the Following Is True of Brady Bonds

question 74

Multiple Choice

Which of the following is true of Brady bonds?

• A)They are uncollateralized.
• B)They have a shorter maturity and a higher than promised coupon (yield) than the original sovereign loans.
• C)The benefit from Brady bond is the "saving" from lower interest spreads required on such bonds.
• D)Their value partly reflects the value of collateral underlying the principal and/or interest on the issue.
• E)Their value fully reflects the credit risk rating of the country issuing the bonds.

---

Definitions:

Dividend Growth Model

A valuation method used to estimate the worth of a stock by assuming that dividends grow at a constant rate indefinitely.

Market Price

The current value at which an asset or service can be bought or sold in the open market.

Declared Dividends

The announcement by a company's board of directors of the payment of a dividend to shareholders at a future date.

Liabilities

Financial obligations or debts owed by a person, company, or entity to others, requiring the outflow of resources to settle.