What Is the Function of Risk Premium

question 158

Multiple Choice

What is the function of risk premium?

• A)To make sure that the value of the bond rises with inflation.
• B)To compensate bondholders for the chance the borrower will not repay the loan.
• C)To distinguish short from long-term bonds.
• D)To raise the return to holding government bonds.

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Definitions:

Future Performance

Predicted achievement or behavior in tasks or activities that will occur at a later time.

Intellectual Abilities

Capabilities related to the mind and intelligence, such as reasoning, problem-solving, and learning.

Binet and Simon

Alfred Binet and Theodore Simon, French psychologists who developed the first intelligence test to identify learning difficulties in children.

Emotional Intelligence

The capability to recognize one's own emotions and those of others, discern between different feelings and label them appropriately, use emotional information to guide thinking and behavior, and manage or adjust emotions to adapt to environments or achieve one's goal(s).