The Spread Between the Interest Rates on Bonds with Default

question 115

Multiple Choice

The spread between the interest rates on bonds with default risk and default-free bonds is called the

• A)risk premium.
• B)junk margin.
• C)bond margin.
• D)default premium.

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Definitions:

Longitudinal Study

A research method in which data is collected from the same subjects repeatedly over a period of time, often many years.

Optimistic Explanatory Style

Refers to a manner of explaining life events in a positive light, attributing good outcomes to personal abilities and bad outcomes to external factors.

Pessimistic Explanatory Style

The inclination to ascribe adverse occurrences to constant, inherent, and widespread factors.

Type A Personality

A personality type characterized by high levels of competitiveness, self-drive, impatience, and a constant sense of urgency.