You Can Distinguish the Various Types of Bonds by Their Terms of Contract
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You Can Distinguish The Various Types Of Bonds
ix. More on types of bonds You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and then on. Identify the type of bond based on each description given in the table that follows: Description Type of Bail These bonds are traded in the bond markets based orn investors' belief that the issuer volition not default on the repayment. These bonds have no collateral and usually offering higher yields. These bonds accept a claim on assets just after senior debt has been paid in full. These bonds are collateralized securities with first claims in the consequence of bankruptcy. Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? o BBB bonds usually have the lowest yields in the bond markets. U.Southward. government bonds usually have the lowest yields in the bond markets. In 2008, the United states of america began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massive decline in existent estate prices, affecting consumers and institutions, peculiarly banking and financial entities. Severe liquidity shortfalls in the United States every bit well as other global markets led to a serious credit crisis. During the credit crunch of 2008-2009, several banks and other businesses went through a reorganization process or were forced to liquidate. Consider the following example:
Respond
These bonds are traded in the bond markets based on investors' belief that the issuer will not default on the repayment. These bonds have no collateral and usually offer higher yields. –DEBENTURES
These bonds have a claim on assets only later on senior debt has been paid in full. –SUBORDINATED DEBENTURES
These bonds are collateralized securities with first claims in the event of bankruptcy. –SENIOR MORTGAGE BONDS
BBB bonds commonly have the lowest yields in the bond markets – THE STATEMENT ISFALSE BECAUSE BBB bonds ARE THE SAFEST AND High YIELDING Bail IN Comparing TO OTHER BONDS.
US government bonds commonly have the lowest yields in the bond markets. – THE Argument ISTruthful BECAUSE BEING THE NO Interest Rate PREVAILING IN THE US Market place, THE US GOVERNMENT BONDS ARE YIELDING LOWEST.
THE GIVEN Instance IS AN Example OFLIQUIDATION
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