Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Explain THREE (3) reasons that make some of the bonds to have high price fluctuation than other bonds.
Expert Solution
Step 1
A bond is a financial instrument of a company that is issued as fixed-income security by the company in order to receive funds from the investors. Bonds are purchased by investors and the company receives the required capital or funds as borrowings from the purchase of the bonds.
The companies or the issuers of the bonds have to pay interest to the bondholders and also have to make a repayment for the amount borrowed through bonds. Bonds are the debt instruments of a company and are used to acquire borrowed capital.
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