The Expected Return on Equities Is Greater Than the Expected

question 64

Multiple Choice

The expected return on equities is greater than the expected return on debt in part because

• A) debt securities are serviced prior to equity securities.
• B) interest payments to bondholders are generally made only if the firm makes a profit.
• C) only a small portion of return to equity comes from increased capital appreciation.
• D) none of the above.

---

Definitions:

Hattusa

The ancient capital of the Hittite Empire, located in modern-day Turkey, known for its unique archaeological ruins.

Composite Creatures

Mythological beings that are made up of parts from different animals or humans and animals combined, often found in various cultures' folklore and art.

Lamassu

Assyrian guardian in the form of a man-headed winged bull or lion.

Composite Creatures

Mythological beings that are depicted as having parts from different animals or humans, often symbolizing specific attributes or powers.