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Consider the following statements regarding Negative-yield bonds.
1. These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price.
2. Central banks or governments generally issue these.
3. Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.
Which of the above statements is/are correct?
  • a)
    1 and 2 only
  • b)
    1 and 3 only
  • c)
    2 and 3 only
  • d)
    All of the above
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Consider the following statements regarding Negative-yield bonds.1. T...
Recently China sold negative-yield debt for the first time, which saw high demand from investors across Europe. As yields in Europe are even lower, there was a huge demand for the 4-billion-euro bonds issued by China. China's 5-year bond was priced with a yield of -0.152%, and the 10-year and 15-year securities with positive yields of 0.318% and 0.664%.
What are negative-yield bonds?
These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price. Central banks or governments generally issue these, and investors pay interest to the borrower to keep their money with them.
Why do investors buy them?
Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion. When the world is battling the Covid-19 pandemic and interest rates in developed markets across Europe are much lower, investors are looking for relatively better-yielding debt instruments to safeguard their interests.
 
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Consider the following statements regarding Negative-yield bonds.1. These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price.2. Central banks or governments generally issue these.3. Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.Which of the above statements is/are correct?a) 1 and 2 onlyb) 1 and 3 onlyc) 2 and 3 onlyd) All of the aboveCorrect answer is option 'D'. Can you explain this answer?
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Consider the following statements regarding Negative-yield bonds.1. These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price.2. Central banks or governments generally issue these.3. Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.Which of the above statements is/are correct?a) 1 and 2 onlyb) 1 and 3 onlyc) 2 and 3 onlyd) All of the aboveCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Negative-yield bonds.1. These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price.2. Central banks or governments generally issue these.3. Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.Which of the above statements is/are correct?a) 1 and 2 onlyb) 1 and 3 onlyc) 2 and 3 onlyd) All of the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Negative-yield bonds.1. These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price.2. Central banks or governments generally issue these.3. Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.Which of the above statements is/are correct?a) 1 and 2 onlyb) 1 and 3 onlyc) 2 and 3 onlyd) All of the aboveCorrect answer is option 'D'. Can you explain this answer?.
Solutions for Consider the following statements regarding Negative-yield bonds.1. These are debt instruments that offer to pay the investor a maturity amount lower than the bond's purchase price.2. Central banks or governments generally issue these.3. Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.Which of the above statements is/are correct?a) 1 and 2 onlyb) 1 and 3 onlyc) 2 and 3 onlyd) All of the aboveCorrect answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
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