Which Scenario Illustrates Specific Deterrence in Action

question 21

Multiple Choice

Which scenario illustrates specific deterrence in action?

• A)Bill is curious to know if he could get away with stealing a chocolate bar but fear of shame and embarrassment deters him from trying this.
• B)Sam has never committed a crime because he believes that he will be quickly caught and punished and this does not make crime worthwhile for him.
• C)John vows never to sell drugs again after he was caught, held in a holding cell, and sentenced to a lengthy period of probation and community service hours.
• D)Tom has thought about shoplifting on occasion but the signs in the store warning of penalties have scared him from doing so.

---

Definitions:

Par

Par value is the nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which may not always reflect the market value.

Cost of Debt

is the effective rate that a company pays on its total debt, an important component in calculating the cost of capital.

Security Market Line

A graphical representation of the risk-return trade-off for individual securities, illustrating the capital asset pricing model (CAPM).

Risk-free Rate

The yield from an investment that carries no risk of losing money.