Stockholders Normally Receive Higher Expected Returns, Compared to Bondholders, Since

question 145

Multiple Choice

Stockholders normally receive higher expected returns, compared to bondholders, since

• A)the government mandates higher payments to stockholders.
• B)stock prices go up and down while bond prices do not.
• C)profits may only be retained by the corporation and not paid out to stockholders.
• D)stockholders could be left with nothing if the corporation fails, and bondholders will receive interest payments even if the corporation suffers losses.

---

Definitions:

Hidden Object Test

A research technique invented by Piaget to assess object permanence in infants from 6 months old. An interesting object, like a small toy, is placed in front of a baby within her reach. As the baby watches, the experimenter covers the object so that it is out of sight. If the baby searches for the object under the cloth she demonstrates that she has a sense of the continued existence of absent objects.

Object Permanence

The fact that objects have a separate existence from the perceiver; that is, they continue to exist even when no one perceives them.

Preoperational Thought

Refers to a stage in Jean Piaget's theory of cognitive development where children from 2 to 7 years old are able to engage in symbolic play but have not yet understood the concept of logical operations.

Language Learning

The process by which individuals acquire the ability to perceive, comprehend, and produce verbal and non-verbal forms of communication.