If the Probability of a Bond Default Increases Because Corporations

question 108

Multiple Choice

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.

• A)decrease;increase
• B)decrease;decrease
• C)increase;increase
• D)increase;decrease

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Definitions:

Autonomic Nervous System

The part of the nervous system responsible for the control of bodily functions not consciously directed, such as breathing, the heartbeat, and digestive processes.

Mnemonic Devices

Techniques a person can use to help them improve their ability to remember something, typically by associating complex information with memorizable aids or patterns.

Episodic Memories

Memories of specific events or experiences, including the context and emotions associated with them.

Memory Consolidation

The process by which short-term memories are transformed into long-term, stable memories in the brain.