Bonds and Other Financial Assets

Name one advantage of bonds for their issuers.

• Bondholders can't share in the profits of a company.

• Issuers must make fixed interest payments, even when it doesn't make a profit.

• Issuers can't change interest payments even when rates have dropped.

• Bonds have the potential to be downgraded.

Why does the United States government issue savings bonds? A. B. C. D.

• To improve its bond rating

• To earn interest

• To pay for government projects

• To raise taxes

What kinds of financial assets are sold on secondary markets?

• Stocks

• Small certificates of deposit

• Savings bonds

• Capital markets

Why do you think ratings are helpful to investors?

• They lower potential risk.

• They raise potential risk.

• They improve the yield for investors.

• They help investors judge potential risk.

How does the tax-exempt status of municipal bonds benefit consumers throughout the U.S. free enterprises system?

• It makes people more likely to buy corporate bonds.

• It makes people more likely to buy municipal bonds.

• It increases the costs of projects like roads and bridges.

• It raises the amount of taxes that the federal government collects.