If a Corporation Begins to Suffer Large Losses, Then the Default

question 99

Multiple Choice

If a corporation begins to suffer large losses, then the default risk on the corporate bond will ________, everything else held constant.

• A) increase and the bond's return will become more uncertain, meaning the expected return on the corporate bond will fall
• B) increase and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall
• C) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall
• D) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will rise

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Definitions:

Cohesiveness

The degree to which members of a group or team are attracted to each other and motivated to stay in the group, influencing team dynamics and performance.

Norms

Implicit or explicit rules that govern the behavior of members within a group or society, shaping expectations and social conduct.

Process Losses

Refers to the decrease in efficiency or productivity in a team due to coordination and motivation problems.

Productivity Losses

The decrease in the output of goods or services relative to input, often due to inefficiencies, distractions, or other factors that impede performance.