Nongovernmental Issues Typically Have Slightly Higher Yields Than Government Issues

question 291

Multiple Choice

Nongovernmental issues typically have slightly higher yields than government issues with similar maturities because ________.

• A) they experience little or no loss in value over time
• B) of the slightly higher risk associated with them
• C) the yields are guaranteed by the federal government
• D) of having stronger secondary market

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Definitions:

Promissory Note

A written, legally binding promise to pay a specific sum of money at a specified time to a person or entity.

Negotiable Instrument

A signed writing that contains an unconditional promise or order to pay an exact sum of money, on demand or at an exact future time, to a specific person or order, or to bearer.

Student Loan

A type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books, and living expenses.

Credit

A financial term describing the ability of a borrower to receive goods or services before payment, based on the trust that payment will be made in the future.