All Else Equal,the Smaller the Default Risk,the ________ of the Bond

question 2

Multiple Choice

All else equal,the smaller the default risk,the ________ of the bond.

• A) higher the face value
• B) higher the price
• C) lower the price
• D) lower the face value
• E) higher the interest rate

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Definitions:

Pension Expense

The cost recognized by an employer for maintaining a defined benefit retirement plan for its employees.

Service Cost

The portion of the pension expense that is attributed to the current year's service, representing the present value of benefits earned by employees during the year.

Pension Trustee

An individual or organization that holds and manages the assets of a pension fund on behalf of its beneficiaries.

Pension Plan

A retirement plan offered by an employer, providing financial benefits to employees upon retirement.