All Else Equal, Which of the Following Bonds Would You

question 35

Multiple Choice

All else equal, which of the following bonds would you expect to offer the highest promised rate of
Return?

• A)BBB bond
• B)A+ bond
• C)AAA bond
• D)BB+ bond

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Capital Intensive

Describes industries or businesses that require large amounts of investment in heavy machinery, equipment, or other capital assets to produce goods or services.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in meeting profitability targets.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount of sales decline a business can tolerate.