1. What is Risk Structure of Interest Rates? Why is it important? explain thoroughly

2. What is credit rating agencies and why is it important?

3. Explain thoroughly the following statement below:

- "Companies with big losses are more likely to suspend interest payments - so their default risk would be very high."

- "US treasury bonds are considered to have no default risk because the government can always increase taxes or print money to pay off its obligations - Default free bonds"

- "The more liquid an asset, the more desirable it is "

- " US treasury bonds are the most liquid of all long term bonds. They are so widely traded, they are easiest to sell quickly"

- " Corporate bonds are not as liquid because fewer bonds for any one corporation are traded .It can be costly to sell these bonds in an emergency because it might be hard to find buyers quickly. "

- " The lower the liquidity, the larger the risk premium."

Answer rating: 100% (QA)

Understanding Key Financial Concepts 1 Risk Structure of Interest Rates The risk structure of interest rates refers to the relationship between the interest rate offered on a bond and its various char... View the full answer