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.
a) 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.
b) Bond coupon payments are borrowing cost for issuers. When interest rates are low, borrowing cost is law, thus more conductive for issurers to lock in low cost.
c) 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.
d) Investors looking for tax-exempt income are likely to invest in companies that pay high dividends.