Common Stockholders Require a Higher Rate of Return Than Do

question 73

Multiple Choice

Common stockholders require a higher rate of return than do holders of Aaa-rated bonds. This reflects which type of risk premium?

• A) maturity
• B) default
• C) seniority
• D) marketability

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Definitions:

Inquisitorial System

A legal system where the court or a part of the court is actively involved in investigating the facts of the case, as opposed to an adversarial system where cases are presented by opposing parties.

Adversarial System

A legal system where two opposing parties present their arguments and evidence in court, and a neutral third party (judge or jury) adjudicates.

Concerned

Reflects a state of being worried, anxious, or interested about something.

Ethical Misconduct

Actions or behavior by an individual or organization that violates ethical standards or principles.