Question

Which of the following statements is true?

Multiple Choice

• The global bond market is about half the size of the global stock market.

• Bonds are a common form of equity financing.

• Bonds are generally traded “under-the-table.”

• The U.S. Treasury is the largest issuer of bonds.

Answer 1

Option D - Correct! - US Treasury accounts for approximately 35% of the bond markets in the US. US is itself the largest bond market around the globe.

Option A: Incorrect: The size of global bond market is more than USD 128 trillion (International Capital Market Association Report), whereas the size of global stock market is over USD 70 trillion (Approximately). Thus, bond market is actually much bigger than the stock market.

Option B: Incorrect: Bonds are form of debt financing, not equity financing.

Option C: Incorrect: Though most bonds trade Over the counter, these may not necessarily be "under the table". However, by default, the OTC transactions have less availability of information as opposed to exchange traded transactions. The term "under the table" specifically refers to trading for tax evasion or secret purposes. Though there is a greater possibility of happening of this, it may not be a case every time.