You can distinguish the various types of bonds by their terms of contract, pledg

Question

You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? BBB bonds usually have the lowest yields in the bond markets. U.S. government bonds usually have the lowest yields in the bond markets. The Export Development Canada (EDC) announced that it launched a USD 1 billion three-year Global Bond, the first global bond of its size in its corporate history. The global bond was issued to support EDC's funding needs, thereby enabling EDC to support more Canadian exporters and investors to do more business internationally and help grow Canada's export trade. Such bonds have the same risk profile as government bonds but pay a premium. Which of the following best describes these bonds? Agency bond income bond In 2008, the united States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massive decline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the united States as well as other global markets led to a serious credit crisis. During the credit crisis of 2008-2009, several banks and other businesses went through a reorganization process or were forced to liquidate. Consider the following example: in December 2008, Hawaiian Telcom took action to strengthen its balance sheet by reducing debt. Although the company continued to operate, its creditors could not collect their debts or loan payments that were due prior to the legal action that the company took. However, on November 30, 2009, the company had $75 million in cash on hand. This is an exam pie of: Reorganization Liquidation

Explanation / Answer

Part 1. Types of bond -

1. Debentures

2. Subordinated debentures

3. Senior mortgage bonds

Part 2. True - US government bonds usually have the lowest yields in the bond market, because the risk is lowet in such bonds.

Part 3. Agnecy bonds

Part 4. Reorganization

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