Which of the Following Statements Are TRUE

question 84

Multiple Choice

Which of the following statements are TRUE?

• A)A decrease in default risk on corporate bonds lowers the demand for these bonds,but increases the demand for default-free bonds.
• B)The expected return on corporate bonds decreases as default risk increases.
• C)A corporate bond's return becomes less uncertain as default risk increases.
• D)As their relative riskiness increases,the expected return on corporate bonds increases relative to the expected return on default-free bonds.

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Definitions:

Normal Balance

The side (debit or credit) on which increases are recorded in an accounting ledger; varies depending on the account type (asset, liability, equity, revenue, or expense).

Post Reference Column

A column in journal and ledger accounts that helps in cross-referencing entries between these two accounting records.

General Journal

A comprehensive record of financial transactions over the life of a company, listed in chronological order.

Assets

Resources owned by a company or individual that have economic value and can provide future benefits.