What Is One Problem That Arises from the Optimal Penalty

question 8

Multiple Choice

What is one problem that arises from the optimal penalty theory?

• A) Offenders who have the ability to pay large fines don't go to prison.
• B) There are no guidelines for determining the dollar amount for fines or ability to pay.
• C) White-collar offenders often spend more time in prison than conventional criminals in addition to a fine.
• D) White-collar offenders receive longer prison sentences because of their inability to pay a fine.

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Definitions:

Coupon Rate

The interest rate on a bond paid by the issuer, expressed as a percentage of the bond's face value.

Coupon Bond

A type of bond that pays the holder a fixed interest rate (coupon) over the bond's life, with the principal repaid at maturity.

Interest-Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates.