Bonds

What is a bond in the context of investments?

• A certificate of deposit

• A form of insurance policy

• A loan given to a company or government

• A type of stock

What does the city of Fairview promise to pay annually on a $1,000 bond with a 2% interest rate?

• $10

• $100

• $50

• $20

What is the primary risk if the issuer of a bond cannot repay the principal?

• Liquidity risk

• Market risk

• Default risk

• Operational risk

Why is it important to consider credit ratings when investing in bonds?

• To understand the stock market

• To decide the bond's maturity date

• To assess the financial stability of the issuer

• To determine the interest rate

How might rising interest rates affect the value of existing bonds?

• Increase their value

• Convert them into stocks

• Decrease their value

• No impact on their value