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If the Probability of a Bond Default Increases Because Corporations

question 108

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If the probability of a bond default increases because corporations begin to suffer large losses,then the default risk on corporate bonds will ________ and the expected return on these bonds will ________,everything else held constant.


Definitions:

Stepwise Regression

An approach to developing regression models where the identification of forecasting variables is performed automatically.

Independent Variables

Variables that are manipulated or changed in an experiment to observe their effect on dependent variables.

Adjusted Coefficient

A modified version of a coefficient that accounts for the complexity of the model or for variables not included in the model.

Independent Variables

Factors in a study or experiment that are intentionally changed or grouped to determine their impact on outcome variables.

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