Bertram Files a Suit Against Hoky Sno Boards Corporation and Obtains

question 9

Multiple Choice

Bertram files a suit against Hoky Sno Boards Corporation and obtains a large damages award. Omni Insurance, Inc., is Hoky's insurer. Ultimately, the cost of the damages award will be paid by

• A) Bertram.
• B) Hoky Sno Boards.
• C) Hoky's customers.
• D) Omni.

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Definitions:

Annual Coupon

The yearly interest payment made to bondholders, based on the bond's face value.

Yield to Maturity

The total return expected on a bond if it is held until the date it matures.

Maturity Risk Premium

The additional yield that investors demand to compensate for the risk of holding a longer-term debt instrument, over and above the risk of short-term instruments.

Default Risk

The risk that a borrower will not make the required payments on their debt obligations, leading to a default.