Which of the Following Factors Could Explain Difference in Yields

question 9

Multiple Choice

Which of the following factors could explain difference in yields on bonds with the same time to maturity?

• A) default risk
• B) interest rate risk
• C) credit risk
• D) all of the above

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Definitions:

Debt-Equity Ratio

The ratio demonstrating the proportionate role of debt and equity in a company's asset financing scheme.

Payout Ratio

The percentage of a company's earnings that is paid out to shareholders in the form of dividends.

Internal Growth Rate

The internal growth rate is a measure of an organization's ability to increase its sales and profit without issuing more stock or incurring new debt.

Full Capacity

A term referring to the maximum level of production or output that a facility can achieve under normal operating conditions.