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

question 44

Multiple Choice

All else equal,the greater 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) lower the interest rate

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Definitions:

Operating Assets

Assets that are used in the day-to-day operations of a business to generate revenue, such as machinery, buildings, and equipment.

Minimum Required Rate

The lowest return on investment that an investor is willing to accept, often influenced by the risk-free rate and the investor's risk tolerance.

Net Operating Income

The profit from a company's operations after subtracting operating expenses from gross income.

Operating Assets

Assets utilized in the day-to-day operations of a business to generate revenue, including machinery, buildings, and equipment.