Bonds that have high liquidity premium are usually have_________?
Correct answer: C. Less frequently traded
- A. Inflated trading
- B. Default free trading
- C. Less frequently traded
- D. Frequently traded
Explanation
A high liquidity premium compensates investors for the difficulty of buying or selling the bond quickly at a fair price. Such bonds are therefore less frequently traded, unlike highly liquid bonds.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
Treasury bonds are exposed to additional risks that are included________?
An annual interest payment divided by current price of bond is considered as_____________?
Coupon rate of convertible bond is_________?
Falling interest rate leads change to bondholder income which is__________?
Bonds issued by corporations and exposed to default risk are classified as_________?
Net present value, profitability index, payback and discounted payback are methods to______________?