Question

question 23
0.1 pts
which of the following statements about financial markets and securities is true?
a debt instrument is intermediate term if its maturity is less than one year.
a bond is a long - term security that promises to make periodic payments called dividends to the firms residual claimants.
a debt instrument is intermediate term if its maturity is ten years or longer.
the maturity of a debt instrument is the number of years (term) to that instruments expiration date.

Explanation:

• Analyze Option 1: A debt instrument with maturity less than 1 year is short - term, not intermediate - term. So this option is false.
• Analyze Option 2: Bonds make coupon payments, and dividends are paid to equity (stock) holders (residual claimants), not bondholders. So this option is false.
• Analyze Option 3: A debt instrument with maturity 10 years or longer is long - term, not intermediate - term. Intermediate - term debt usually has a maturity between 1 and 10 years. So this option is false.
• Analyze Option 4: The maturity of a debt instrument is indeed defined as the number of years until the instrument's expiration date. This statement is true.

Answer:

The maturity of a debt instrument is the number of years (term) to that instrument's expiration date.