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Commerce · Q542

Financial Management

Graduate and Post Graduate · Commerce · question 542

Q542

Bonds that have high liquidity premium are usually have

A.
inflated trading
B.
default free trading
C.
less frequently traded
Answer
D.
frequently traded

Answer: Option C

Solution

Answer: Option C
Solution:
Bonds that have high liquidity premium are usually have less frequently traded. A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.