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:

Deception

The practice of deceiving someone through the presentation of incorrect data or by hiding the facts.

Polygraph

A device, commonly referred to as a lie detector, that measures and records several physiological indicators such as blood pressure, pulse, respiration, and skin conductivity while the subject is asked and answers a series of questions.

Mood

A temporary state of mind or feeling that can influence perception, behavior, and overall emotional state.

Facial Feedback

The hypothesis that facial movements can influence emotional experiences, suggesting that smiling can make one feel happier.