If a Company Gets Concessions from Labor in Union Negotiations

question 61

Multiple Choice

If a company gets concessions from labor in union negotiations, one would expect a(n) _____ in the risk premia on its bonds due to an increase in

• A) increase; default risk.
• B) decrease; default risk.
• C) increase; liquidity.
• D) decrease; liquidity.

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Definitions:

Payoff

The return or reward received from an investment or action, often analyzed in game theory and economics.

Proportion

A portion, fraction, or quantity that is seen in contrast to the entire entity.

Equilibrium

A condition or state where all acting influences are balanced, particularly in a market when supply equals demand.

Penalty Kick

A penalty kick in economics might refer metaphorically to an opportunity to score or gain significantly with little opposition, though it's primarily a sports term.