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Which of the following statements about financial markets and securities are true?
- a)A debt instrument is an intermediate-term if its maturity is less than one year
- b)A debt instrument is long-term if its maturity is ten years or longer
- c)The maturity of a debt instrument is the time (term) that has elapsed since it was issued
- d)A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants
Correct answer is option 'B'. Can you explain this answer?
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Which of the following statements about financial markets and securiti...
A debt instrument is considered long-term if its maturity period is ten years or longer.
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Which of the following statements about financial markets and securiti...
Understanding Debt Instruments
Debt instruments are financial assets that represent a loan made by an investor to a borrower. They come with varying maturities, distinguishing them into short-term, intermediate-term, and long-term categories.
Statement Analysis
- a) A debt instrument is an intermediate-term if its maturity is less than one year.
This statement is false. An intermediate-term debt instrument typically has a maturity ranging from one to ten years.
- b) A debt instrument is long-term if its maturity is ten years or longer.
This statement is true. Long-term debt instruments have maturities of ten years or more, making them suitable for investors looking for extended periods before maturity.
- c) The maturity of a debt instrument is the time (term) that has elapsed since it was issued.
This statement is false. The maturity of a debt instrument refers to the remaining time until the loan is to be repaid, not the elapsed time since issuance.
- d) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.
This statement is false. Bonds are indeed long-term securities, but they promise periodic interest payments, not dividends, which are paid to shareholders.
Conclusion
In summary, the only correct statement regarding debt instruments is option b, which accurately reflects the definition of long-term debt instruments. Understanding these classifications is crucial for making informed investment decisions in financial markets.
Debt instruments are financial assets that represent a loan made by an investor to a borrower. They come with varying maturities, distinguishing them into short-term, intermediate-term, and long-term categories.
Statement Analysis
- a) A debt instrument is an intermediate-term if its maturity is less than one year.
This statement is false. An intermediate-term debt instrument typically has a maturity ranging from one to ten years.
- b) A debt instrument is long-term if its maturity is ten years or longer.
This statement is true. Long-term debt instruments have maturities of ten years or more, making them suitable for investors looking for extended periods before maturity.
- c) The maturity of a debt instrument is the time (term) that has elapsed since it was issued.
This statement is false. The maturity of a debt instrument refers to the remaining time until the loan is to be repaid, not the elapsed time since issuance.
- d) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.
This statement is false. Bonds are indeed long-term securities, but they promise periodic interest payments, not dividends, which are paid to shareholders.
Conclusion
In summary, the only correct statement regarding debt instruments is option b, which accurately reflects the definition of long-term debt instruments. Understanding these classifications is crucial for making informed investment decisions in financial markets.
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Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer?
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Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer? for Bank Exams 2024 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Bank Exams 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer?.
Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer? for Bank Exams 2024 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Bank Exams 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements about financial markets and securities are true?a)A debt instrument is an intermediate-term if its maturity is less than one yearb)A debt instrument is long-term if its maturity is ten years or longerc)The maturity of a debt instrument is the time (term) that has elapsed since it was issuedd)A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimantsCorrect answer is option 'B'. Can you explain this answer?.
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