A Corporate Bond Matures in One Year

question 33

Multiple Choice

A corporate bond matures in one year. The bond promises a coupon of $50 and principal of $1,000 at maturity. If the bond has a 10 percent probability of default and payment under default is $400, calculate the expected payment from the bond.

• A)$1,050
• B)$400
• C)$985
• D)$1,000

---

Definitions:

Indirect Approach

A communication technique in which the main point or critical message is delivered after providing background information and building context.

Negative News

Information or announcements that are undesirable or disadvantageous, often impacting perceptions or results negatively.

Buffer

A component in communication designed to soften the impact of the message, often used before delivering bad news.

Buffer Statement

An opening remark or sentence intended to soften the impact of a negative message that follows.