Sovereign bonds,unlike corporate bonds,are insulated from default risk because the issuer has the ultimate ability to print money to meet debt servicing obligations. A major reason that investors do in fact associate risk with the bonds of certain countries is that
A) were it necessary to print money to meet their debt obligations, this would likely increase inflation and thereby result in a decline in the real rate of return when the debt matures.
B) there is uncertainty because governments often face re-election during the period prior to the maturity of their sovereign bonds.
C) sovereign bonds are usually less liquid than corporate bonds denominated in the same currency.
D) corporate bonds are backed by tangible physical assets which is not the case with sovereign bonds.
Correct Answer:
Verified
Q85: Use the information for the question(s)below.
Luther Industries
Q86: Use the information for the question(s)below.
Luther Industries
Q89: Use the information for the question(s)below.
Luther Industries
Q90: In Canada,the yield to maturity of bonds
Q94: Forward interest rates tend
A) to accurately predict
Q95: Which of the following statements is correct?
A)
Q97: Use the table for the question(s)below.
Consider the
Q106: Use the table for the question(s)below.
Consider the
Q110: Explain why the expected return of a
Q112: Use the table for the question(s)below.
Consider the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents