What is the typical denomination for most corporate bonds?

• A. \$1,000
• B. \$10,000
• C. \$5,000
• D. \$100

Answer: (A)

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.
2. 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.
3. 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.
4. 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.
5. 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.