Group5

What role do households primarily play in the capital market?

• Issuers of long-term notes and bonds

• Purchasers of capital market securities through financial institutions

• Regulators of secondary market transactions

• Managers of corporate bond indentures

Which market involves the trading of previously issued securities?

• Primary market

• Investment market

• Secondary market

• Bond issuance market

What is the main characteristic of bonds?

• Ownership of the issuing corporation

• Share of profits and losses

• Debt owed by the issuer to the investors

• Voting rights in corporate decisions

What distinguishes Treasury notes from Treasury bonds?

• Maturity period

• Interest payment frequency

• Government backing

• Tax-exempt status

What purpose do Treasury Inflation-Protected Securities (TIPS) serve?

• To provide high-interest rates

• To mitigate inflation risk

• To offer tax benefits

• To facilitate international trade

Which type of bond allows investors to trade individual components of Treasury bonds?

• Corporate bonds

• Agency bonds

• Municipal bonds

• Treasury STRIPS

What is the main characteristic of general obligation bonds?

• Backed by specific revenue-generating projects

• Backed by the full faith and credit of the issuer

• Offered only to corporate investors

• Payable only upon conversion to stocks

What is the purpose of call provisions in bond indentures?

• To restrict dividends

• To allow conversion to stocks

• To repurchase bonds before maturity

• To adjust interest rates periodically

What type of bond is secured by collateral pledged by the issuer?

• Junk bond

• Secured bond

• Unsecured bond

• Convertible bond

1. Why are junk bonds considered riskier investments?

• 1. They have higher credit ratings

• 1. They are backed by the government

• 1. They have lower priority claims in case of default

• They offer lower interest rates