Assume the Bonds Below Have the Same Term and Principal

question 28

Multiple Choice

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating.Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?

• A)corporate bond,municipal bond,U.S.government bond
• B)corporate bond,U.S.government bond,municipal bond
• C)municipal bond,U.S.government bond,corporate bond
• D)U.S.government bond,municipal bond,corporate bond

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Definitions:

Public Corporation

A company whose shares are traded freely on a stock exchange, with many shareholders and subject to public reporting regulations.

Ethics

The branch of philosophy that deals with moral principles, governing a person's behavior or conducting an activity.

Common Stock

Equity ownership in a corporation, with voting rights and potential dividends.

Corporate Form

A legal entity structure for businesses, distinguishing the business as a separate entity from its owners.