We Would Expect the Interest Rate on Bond a to Be

question 101

Multiple Choice

We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that

• A)Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation.
• B)Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York.
• C)Bond A has a term of 1 year and Bond B has a term of 5 years.
• D)All of the above are correct.

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Definitions:

Registered Retirement Savings Plans

A type of Canadian account for holding savings and investment assets, aimed at savings for retirement.

Accumulate Tax-Free

The process of earning or saving money without having to pay taxes on the gains, usually within specific investment accounts or schemes.

Workers' Compensation Insurance

Insurance that provides wage replacement and medical benefits to employees injured in the course of employment.

Work-Related Accidents

Accidents that occur in the course of employment, potentially resulting in injury or occupational disease.