If a Corporation Begins to Suffer Large Losses,then the Default

question 5

Multiple Choice

If a corporation begins to suffer large losses,then the default risk on the corporate bond will

• A)increase and the bond's return will become more uncertain,meaning the expected return on the corporate bond will fall.
• B)increase and the bond's return will become less uncertain,meaning the expected return on the corporate bond will fall.
• C)decrease and the bond's return will become less uncertain,meaning the expected return on the corporate bond will fall.
• D)decrease and the bond's return will become less uncertain,meaning the expected return on the corporate bond will rise.

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