2. a home mortgage company backed by the government wants to raise money for more first - time home mortgage…

2. a home mortgage company backed by the government wants to raise money for more first - time home mortgage loans. which type of bond would the government sponsored agency issue? why?\n3. an investor wants to make the safest possible bond investment and plans to collect the interest for ten years. which type of bond should the investor purchase? why?\n4. a large corporation wants to expand into asian markets. they want to issue a bond and plan to guarantee the bond with land holdings in latin america. what type of bond would they issue? why?\n5. a major corporation wants to issue a bond, they have a reputation for being a trustworthy company. they want to use their credit rating to guarantee the bond. what type of bond would they issue? why?\n6. an investor wants to support the increase of waterpower in america and would like to purchase a bond from the tennessee valley authority. what type of bond would he purchase? why?

2. a home mortgage company backed by the government wants to raise money for more first - time home mortgage loans. which type of bond would the government sponsored agency issue? why?\n3. an investor wants to make the safest possible bond investment and plans to collect the interest for ten years. which type of bond should the investor purchase? why?\n4. a large corporation wants to expand into asian markets. they want to issue a bond and plan to guarantee the bond with land holdings in latin america. what type of bond would they issue? why?\n5. a major corporation wants to issue a bond, they have a reputation for being a trustworthy company. they want to use their credit rating to guarantee the bond. what type of bond would they issue? why?\n6. an investor wants to support the increase of waterpower in america and would like to purchase a bond from the tennessee valley authority. what type of bond would he purchase? why?

Answer

Brief Explanations:

  1. Government - sponsored agencies often issue mortgage - backed securities (MBS). These bonds are backed by a pool of mortgage loans. Since the agency is focused on first - time home mortgage loans, MBS allow them to raise funds by selling the rights to the cash flows from these mortgages.
  2. The safest bond investment is typically a U.S. Treasury bond. The U.S. government has a very low default risk, and Treasury bonds are backed by the full faith and credit of the U.S. government. For a long - term interest collection (ten years), the stability of Treasury bonds is ideal.
  3. The corporation would issue a secured bond. By guaranteeing the bond with land holdings in Latin America, they are providing collateral. Secured bonds have an asset (in this case, land) pledged as security, reducing the risk for bondholders.
  4. They would issue a debenture. A debenture is an unsecured bond that is backed only by the creditworthiness of the issuing company. Since the company has a good credit rating, it can use its reputation to issue a debenture without providing specific collateral.
  5. The investor would purchase a municipal bond. The Tennessee Valley Authority (TVA) is a government - owned corporation, and bonds issued by such entities for public projects (like increasing waterpower) are considered municipal bonds. These bonds often have tax - advantages and support public infrastructure projects.

Answer:

  1. Mortgage - backed securities. Reason: Backed by pool of first - time home mortgage loans for fundraising.
  2. U.S. Treasury bond. Reason: Low default risk, backed by U.S. government for long - term stability.
  3. Secured bond. Reason: Collateralized by land holdings in Latin America.
  4. Debenture. Reason: Unsecured, backed by company's credit rating.
  5. Municipal bond. Reason: Issued by government - owned TVA for public waterpower project.