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Multiple Choice
What is the typical denomination for most corporate bonds?
A
$1,000
B
$10,000
C
$5,000
D
$100
Verified step by step guidance
1
Understand the concept of corporate bonds: Corporate bonds are debt securities issued by companies to raise capital. They typically have a face value or denomination, which is the amount the issuer agrees to repay the bondholder at maturity.
Learn about the standard denomination: In the U.S., most corporate bonds are issued with a face value of $1,000. This is the typical denomination used for trading and pricing in the bond market.
Compare the options provided: The options given are $1,000, $10,000, $5,000, and $100. Among these, $1,000 is the standard denomination for most corporate bonds.
Understand why $1,000 is standard: The $1,000 denomination is widely used because it is accessible to a broad range of investors and simplifies trading in the secondary market.
Conclude the reasoning: Based on the explanation above, the typical denomination for most corporate bonds is $1,000, as it aligns with industry standards and practices.