Why do entities borrow in the form of debt obligations? Economies around the world were still recovering during 2012 after the 2008-2009 recession. Governments and central banks continued their efforts to facilitate economic recovery. The U.S. Federal Reserve Bank (the Fed) kept interest rates at record lows. This, along with several other reasons, found the bond markets flooded with new bond issues. The following article highlights some reasons why firms issued debt obligations to raise funds In the context of the reasons why entities borrow in the form of bond issues, which statement is correct? Check all that apply. Corporate-Bond Issuers Race to the Market as U.S. Yields Approach Record Low BanK or America ierrii Lyncn u.S. Corporate Master Index." When investors look for instruments that help generate income and have lower risk levels-as compared to equity offerings-they are eager to invest in debt obligations Bond coupon payments are borrowing costs for issuers. When interest rates are low, borrowing cost is low, thus more conducive for issuers to lock in low costs When equity markets are turbulent and investors prefer relatively safer fixed-income securities, bond markets become a safe place to invest. This leads to increased demand, thus encouraging corporations to supply fixed-income securities. Investors looking for tax-exempt income are likely to invest in companies that pay high dividends. Another factor contributing to the rising issues of investment-grade bonds was purchasers eagerness to invest in high-quality securities Sales of debt offerings had fallen 19% from the year before, and that made investors eager to spend cash on offerings Sources: Hong, Nicole, Berkshire, P&G Lead Charge of Corporate Bond Issuers. The Wall Street Journal Online 10 Aug. 2011, Catts, Tim, IBM, P&G Plan Bond Sales as U.S. Yields Approach Record Low. BusinessWeek, 1 Feb. 2012, . The relationship between corporate bond yields and Treasury yields The article highlights an important relationship between the corporate bond yields and the U.S. Treasury yields. When demand for Treasuries increases, prices rise and yields . All else being equal, this leads to the of corporate bond yields because they are riskier and their yields are than U.S. Treasury yields. However, this does not necessarily imply that particular changes in the Treasury yield will lead to similar changes in the corporate bond yields. A corporate bond with a narrow yield spread and high credit rating will offer a relatively return when the bond is purchased. However, if the yield spread widens, the price of the bond will thus the value of the fixed-income asset class in the investor's portfolio