1. Types of bonds

Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date.

The entity that promises to make the interest and maturity payments for a bond issue is called the .

Based on the information given in the following statement, answer the questions that follow:

In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup.

Who is the issuer of the bonds?

The Hungarian government

Hungary Bank

Citigroup

What type of bonds are these?

Government bonds

Municipal bonds

Corporate bonds

Which of the following statements is true about bonds?

When interest rates increase, the prices of U.S. Treasuries increase.

When interest rates increase, the prices of U.S. Treasuries decline.

Which of the following types of bonds has the least default risk?

Corporate bonds

Treasury bonds

Municipal bonds