The financial institutions generally such as insurance companies and banks are prohibited to buy anything but __________?
Correct answer: B. investment grade bond securities
- A. split grade bonds
- B. investment grade bond securities
- C. portfolio grade bonds
- D. sinking grade bonds
Explanation
Investment-grade bonds meet the minimum credit-quality standards normally required for purchase by regulated institutions such as banks and insurance companies. Split-grade and portfolio-grade are not the standard classifications used here.
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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.
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