Bonds with Relatively Low Risk of Default Are Called ________

question 15

Multiple Choice

Bonds with relatively low risk of default are called ________ securities and have a rating of Baa (or BBB) and above;bonds with ratings below Baa (or BBB) have a higher default risk and are called ________.

• A)investment grade;lower grade
• B)investment grade;junk bonds
• C)high quality;lower grade
• D)high quality;junk bonds

Recognize the implications of sunk costs in economic decisions.

Understand the application of marginal analysis in "either-or" decisions.

Understand the relationship between marginal costs and production levels.

Identify when a production level is optimal based on marginal costs and benefits.

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Definitions:

Psychological Motivation

The internal processes that stimulate and direct human behavior toward achieving personal or professional goals.

Power

The ability or capacity to influence or control the behavior of others or the course of events.

Need for Affiliation

A psychological term denoting an individual's desire to build relationships and feel connected to others.

Excel

A spreadsheet program developed by Microsoft that allows users to organize, format, and calculate data with formulas using a system of rows and columns.