Corporate Bonds That Pay Higher Interest but Also Have a Higher

question 111

Multiple Choice

Corporate bonds that pay higher interest but also have a higher risk of default are called:

• A)convertible bonds.
• B)high-yield bonds.
• C)mortgage bonds.
• D)serial bonds.
• E)callable bonds.

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Definitions:

Residual Income

The income that exceeds the required return on investment or minimum acceptable rate of return set by management.

Corporate Minimum Required Rate of Return

The lowest acceptable rate of return on an investment that a corporation deems sufficient for its operations and growth.

Division's Turnover

A financial metric that measures the revenue generated by a specific division of a company relative to its assets, used to evaluate the division's efficiency in generating sales.

Manufacturing Cycle Efficiency

A performance metric that evaluates the effectiveness of the manufacturing process, focusing on the proportion of value-added time to total lead time.