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Chapter 13: Q2Q (page 658)

Question: What purpose does the variety in bond features (types and characteristics) serve?

Short Answer

Expert verified

Answer:

Variety in bond features helps investors reduce their risk and generate a high yield.

Step by step solution

01

Definition of bond

A bond may be a certificate style within which an organization or government takes a loan from the final public. During this, the company or government promises to pay interest.

02

Purpose of variety in bonds 

The main feature of the variability shackled is that it provides a variable rate of interest. Variable charge per unit means those rates of interest which aren't fixed. It helps investors scale back their risk and help them induce high yields. Bond variety also helps the issuer by way of debt.

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