The Main Difference Between Promissory Notes and BABs Is That

question 36

Multiple Choice

The main difference between promissory notes and BABs is that:

• A)the yield on promissory notes is considered a 'risk-free' rate
• B)promissory notes trade at a common yield
• C)BABs are much riskier because the borrowers are less creditworthy
• D)BABs are accepted before they are issued
• E)All of these.

---

Definitions:

Audit Trail

A record that traces the detailed financial transactions of an entity to its original source for verification purposes.

Trade Record

Documentation or data that keeps track of all trading activities, including purchases and sales of securities.

Paper Trail

A series of documents or records that provide evidence of a person's or organization's transactions, actions, or history.

Expected Returns

The anticipated amount of profit or loss an investment is predicted to generate based on historical or projected performance.