In: Economics
Answer to Question 1)
Bonds are a form of debt instruments which can be issued by governments or by companies which are allowed to under local administration guidelines.
The institution which issues bonds, requires to return the amount collected initially and also pays a dividend which, it is free to decide upon. It is also important to note, that bonds may be available on discount or on a premium and are determined by the risk factor and the necessity of the enterprise itself.
For example, the government is a secure entity and the chances of default are minimum. On the contrary, Ashanti Goldfields is a private company and may default on its loan. Thus, which Ashanti Gold Fields may offer a bond at a discount, the government would most likely never do so as the risk factor in Ashanti Gold Fields is higher than that of the government itself.
Thus, if with an investment of 500$, Ashanti Goldfields provides a return of 550$ at an interest rate of 10% per annum to the end consumer, chances of subscription of this bond type increase in comparison to government bonds which may only be able to provide 2% interest rate on similar investment.
The trade-off between risk and returns is the reason why Ashanti Gold Fields may be over subscribed up and over the government bonds which are available in the market. The simple logic of Ashanti Gold fields providing better returns is the reason it may see higher volume of subscriptions than government bonds.
Please feel free to ask your doubts in the comments section if any.