As Default Risk Decreases,the Expected Return on Corporate Bonds ________,And

question 27

Multiple Choice

As default risk decreases,the expected return on corporate bonds ________,and the return becomes ________ uncertain,everything else held constant.

• A)increases;less
• B)increases;more
• C)decreases;less
• D)decreases;more

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Definitions:

Return on Equity

A financial ratio representing the amount of net income returned as a percentage of shareholders equity, demonstrating a company's efficiency in generating profits.

Owner's Investment

The initial amount of money or assets an owner contributes to start or support the business.

Firm

Another term for a business or company, often used in legal contexts.

Times Interest Earned Ratio

A financial metric used to determine a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes (EBIT) by interest expense.