A Bond with Default Risk Will Always Have a ________

question 50

Multiple Choice

A bond with default risk will always have a ________ risk premium and an increase in its default risk will ________ the risk premium.

• A)positive;raise
• B)positive;lower
• C)negative;raise
• D)negative;lower

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Definitions:

Payments

The act of transferring money from one party to another, often as compensation or for goods and services.

Compounded Quarterly

Compounded quarterly refers to the method of calculating interest where it is added to the principal sum four times a year, resulting in an increase in the amount over time due to the compounding effect.

Monthly Deposit

A fixed sum of money placed into an account at regular monthly intervals.

Interest

The cost of borrowing money or the return on invested capital, typically expressed as a percentage over a period of time.