Question

Which of the following is correct?a. Lenders sell bonds and borrowers buy them.b. Long-term bonds usually pay a lower interest rate than do short-term bonds because long-term bonds are riskier.c. The term junk bonds refers to bonds that have been resold many times.d. None of the above is correct.

Answer 1

Answer:

d. None of the above is correct.

Explanation:

(A) FALSE

lenders and borrowers are the same.

both are the company who issue the bonds

(B) FALSE

the long-term bond pays a higher interest rate than short term bonds

That is because the life of the bond is greate, so it is affected more by an interest rate change. In more life, more chances of an interest rate increase.

The investor will need a higher than the current rate to purchase a long term bond

(C) FALSE

junk bonds refer to bond with a higher chance of default, regardless of the times had been sold