Which of the Following Statements Is True

question 79

Multiple Choice

Which of the following statements is 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:

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service, especially a percentage of the money received from a total paid to the agent responsible for the business.

Principals

The original amount of money invested or loaned, on which basis interest and returns are calculated.

Total Commission

The entire amount of money earned by an individual or a company as a result of successfully completing a sale or series of sales.

Commission Payment Plans

Arrangements where salespersons or employees are paid based on their sales or performance, usually as a percentage of the revenue they generate.