Question:

Which of the below statement is TRUE?

Bond rated as AAA has high risk as compared to bond rated as BBB

Bond rated as AAA has high return as compared to bond rated as $BBB$

Bond rated as AAA has lower risk as compared to bond rated as BBB

Bond rated as BBB has stable income as compared to bond rated as AAA

In bond investment, what is default risk?

The probability that changes in market rates of interest will affect bond's value

The probability that the borrower will not be able to pay interest or principal value of a

bond when it is due

The probability that a bond will be difficult to sell at a reasonable price in the market

The probability that a bond will be redeemed before the scheduled maturity date.

Preferred stock is known a hybrid security because it has combinations characteristics of

common stock and bonds.

True

False

Preferred stock is known a hybrid security because it has combinations characteristics of

common stock and bonds.

True

False

Bond is a long$-$term debt instrument indicating that a corporation has borrowed a certain

amount of money and promises to pay fixed amount interest payment every year and

repayment of principal at maturity.

True

False

Share is a debt security which represents a portion of the owner's capital in a business, also

indicates ownership in a corporation.

True

False