Which of the Following Statements Is NOT CORRECT

question 11

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) The expected return on a corporate bond must be less than its promised return if the probability of default is greater than zero.
• B) All else equal, senior debt has less default risk than subordinated debt.
• C) A company's bond rating is affected by its financial ratios and provisions in its indenture.
• D) Under Chapter 11 of the Bankruptcy Act, the assets of a firm that declares bankruptcy must be liquidated, and the sale proceeds must be used to pay off its debt according to the seniority of the debt as spelled out in the Act.
• E) All else equal, secured debt is less risky than unsecured debt.

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Definitions:

Gestation

The period of development inside the womb from conception until birth.

Birth Weight

The weight of a newborn measured immediately after birth, an important indicator of neonatal health and development.

Gavage-Feeding

The process of feeding a person or an animal through a tube inserted into the stomach, used when oral intake is not possible.

Preterm Newborn

A baby born before 37 weeks of gestation, often requiring specialized care due to underdeveloped organs.