Researchers Have Found a Positive Relationship Between Default Spread and Stock

question 85

Multiple Choice

Researchers have found a positive relationship between default spread and stock returns in the long run because a large default spread implies

• A) a high risk premium and higher expected returns.
• B) a high risk premium and lower expected returns.
• C) a low risk premium and higher expected returns.
• D) a low risk premium and lower expected returns.
• E) none of the above.

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Definitions:

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Scientific Terminology

Language and terms that are specifically used within the scientific community for precise communication regarding research, findings, and concepts.