Which of the Following Is True of Bonds

question 60

Multiple Choice

Which of the following is true of bonds?

• A)A subordinated debt ranks higher in priority for payment of principal than senior debt.
• B)A convertible bond pays a higher interest rate than a traditional bond.
• C)A junk bond pays a higher interest rate than rates paid by strong companies.
• D)A junk bond usually has priority over a subordinated debt instrument.

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Definitions:

Marginal Utility

The added satisfaction or usefulness obtained from using one more unit of a product or service.

Total Utility

The total satisfaction or benefit received by consuming a particular quantity of a good or service.

Price Ratio

The relative price of one good or service compared to another, often indicating how many units of one good can be exchanged for one unit of another.

Price

The monetary value anticipated, needed, or dispensed for acquiring something.