​ Default Refers To

question 8

Multiple Choice

​ Default refers to:

• A)a breach of any contractual obligation.
• B)an oral testimony to perform an obligation.
• C)a written rule that may not be modified.
• D)an obligation to pay money.

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Definitions:

Risk Premium

The additional return an investor requires to invest in an asset over a risk-free rate, compensating for the risk of the investment.

Yield

The income return on an investment, such as the interest or dividends received, often expressed as an annual percentage based on the investment’s cost, current market value, or face value.

CAPM Approach

The Capital Asset Pricing Model, a formula used to determine the expected return on investment (ROI) by correlating the risk and expected return.

Cost of Equity

The return that shareholders require or expect to earn on their investment in the company, considered as the company's cost of retaining and using equity capital.