Consider the Effect of Business Cycles on Bondholders Versus Stockholders

question 96

Multiple Choice

Consider the effect of business cycles on bondholders versus stockholders. We expect that business cycles will affect:

• A) bondholders and stockholders about the same.
• B) bondholders more since the amount they receive depends on profits.
• C) stockholders more since they are residual claimants.
• D) bondholders more since they do not have any claim to property.

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Definitions:

Subclavius

The Subclavius is a small muscle located beneath the clavicle, playing a role in stabilizing the clavicle.

Pectoralis Minor

A thin, triangular muscle located beneath the pectoralis major muscle on the chest, participating in movements of the shoulder girdle.

Extensor Indicis

A muscle in the forearm that extends the index finger at the joints.

Extensor Carpi Ulnaris

A muscle in the forearm that extends the wrist and aids in its adduction.