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:

Counteroffer

An offer made in response to another offer, rejecting the original offer and presenting new terms for an agreement.

Option

A separate contract in which an offeror agrees not to revoke her offer for a stated period of time in exchange for some valuable consideration.

Reasonable Time

A period that is fair and appropriate given the circumstances, often used in contracts to define a period for the performance of an obligation.

Subjective Approach

A perspective or method that relies on personal opinions, interpretations, feelings, or tastes, rather than objective or external facts.