Why do most municipal bonds pay lower interest than riskless Treasury bonds?

Q: What happens to junk bonds in a recession

A: A junk bond refers to that that bond issued by companies that do not have an investment grade credit…

Q: Why might a company choose to raise money through bonds, rather than take out a note payable or…

A: Bonds are the long-term liability of the company where the company raises the money in lieu of…

Q: Bonds that pay no interest unless the issuing company is profitable are called Select one: O a.…

A: Wrong answer    B) Collateral trust bond: Collateral means additional security. Thus in collateral…

Q: Are US Treasury bonds truly risk free?

A: United state treasury bonds are reflective of all such treasury securities which are protected…

Q: What are your thoughts about buying short term bonds vs. long term bonds in this economic situation?

A: Long-term bonds are more vulnerable to shifts in interest rates. The explanation is the existence of…

Q: Why would a company wish to reduce its bond indebtedness before its bonds reach maturity? Indicate…

A:

Q: Revenue bonds, compared with general obligation bonds, generally A.) Are paid out of property or…

A: Revenue Bonds: Revenue bonds are a type of municipal bond issued by a government agency or entity to…

Q: Explain the interest rate sensitivity of government debt as a function of: i) its maturity and ii)…

A: Financing price affectability may be a proportion of what quantity the value of a fixed-pay resource…

Q: Which of the following statements about bonds is NOT true? O The less marketable a bond, the higher…

A: Interest rates and bond prices are closely tied. This is untrue since interest rates and bond prices…

Q: What ratings comprise investment-grade bonds and what ratings are used for junk bonds?

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Who issues Bonds? Why should you own Bonds?  What are the risks of owning Bonds?

A: Bonds are the debt instrument issued to the bondholders of the organisation.

Q: Which of the following describes a bond's credit risk? O The probability that financially sound…

A: The credit risk of a bond refers to the likelihood that the issuer of the bond will default on its…

Q: What are municipal bonds? What characteristics makes them especially attractive to high-income…

A: The state government issues municipal bonds. They can be thought of as a risk-free investment…

Q: Why are U.S. government securities viewed differently from state and local government securities in…

A: The question is based on the concept of risk of default in bond investment. The default risk is…

Q: Which of the following lowers the required interest rate that firms have to pay on their bonds?…

A: Companies tend to pay larger interest rates as the risk is raised to the bond investor since the…

Q: When selling bonds at a premium, the premium received effectively a.does not affect the cost of…

A: Premium means selling of bond at price higher than face value.

Q: Why is there a risk of downgrading on long-term bonds?

A: Long-term bonds are usually for longer terms like 10, 20, 25 or 30 years. due to longer durations,…

Q: When inflation increases, does that increase, decrease, or have no effect on the credit spread for a…

A: A credit spread is the difference in yield of a US Treasury security and the yield on a corporate…

Q: What do municipal bonds typically have a lower interest rate than corporate bonds?

A: Municipal bonds are  less likely to default than corporate bonds.

Q: Does a steady low-volatilty enviroment, increase, decrease, or have no effect on the credit spread…

A: If we closely observe we can find out that there are number of participants in a financial market.…

Q: Are interest rates of junk bonds always higher or lower than investment-grade bonds? Why?

A: A bond is a financial instrument that pays interest to the investor periodically and return of…

Q: What are junk bonds?

A: Answer: A junk bond is a high risk and high yield bond often considered as unsecured bond that is…

Q: Why are long-term corporate bonds higher risk than short-term corporate bonds? Provide an example

A: Longer term bonds have higher risks than short term bonds due to their duration and time period.…