Which of the Following Statements Is NOT CORRECT

question 55

Multiple Choice

Which of the following statements is NOT CORRECT?

• A)All else equal, secured debt is less risky than unsecured debt.
• B)The expected return on a corporate bond must be less than its promised return if the probability of default is greater than zero.
• C)All else equal, senior debt has less default risk than subordinated debt.
• D)A company's bond rating is affected by its financial ratios and provisions in its indenture.
• E)Under Chapter 11 of the Bankruptcy Act, the assets of a firm that declares bankruptcy must be liquidated, and the sale proceeds must be used to pay off its debt according to the seniority of the debt as spelled out in the Act.

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Definitions:

Performance-outcome Expectancy

The belief about the likelihood that one's effort will lead to desired performance levels and outcomes.

Negative Inequity

Negative Inequity occurs when an individual perceives that their own input-output ratio is less favorable compared to others, leading to feelings of unfair treatment.

Work Inputs

Resources, effort, and materials required to perform tasks and produce outputs in a work environment.

Goal-Setting Theory

A motivational theory that emphasizes the importance of setting specific, challenging goals to enhance performance and achieve desired outcomes.