What characterizes a negotiated sale of bonds?

A negotiated sale of bonds is characterized by the direct negotiation between the issuer and the underwriter or group of underwriters, as indicated by the correct answer. In this process, the terms of the bond, including price, quantity, and interest rate, are discussed and agreed upon before the sale, allowing for greater flexibility and customization to meet the specific needs of both the issuer and the investors.

This method contrasts with a competitive sale, where bonds are sold through public auction, and the issuer typically has less control over the final terms. While bonds can be sold at a fixed rate, this characteristic is not exclusive to negotiated sales and can apply to any type of bond sale. Additionally, government-backed bonds may exist in various sales methods, so this is not a defining feature of negotiated sales specifically. The negotiated process thus allows for a tailored approach that can facilitate better outcomes based on active dialogue.