SIE practice questioneasyCorporate bonds
A corporation issues a 10-year bond with a 5% coupon, payable semiannually. Which of the following best describes this security?
- AA corporate bond✓ Correct answer
- BA municipal bond
- CA Treasury bond
- DA mortgage-backed security
Explanation
Why A — A corporate bond
Corporate bonds are debt securities issued by corporations to raise capital. Municipal bonds are issued by state or local governments, Treasury bonds by the U.S. government, and mortgage-backed securities are backed by pools of mortgages.
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