If a Borrower Defaults on a Bond,it Means That

question 100

Multiple Choice

If a borrower defaults on a bond,it means that:

• A) the borrower has one year to pay before facing possible jail time.
• B) the borrower did not pay back the loan on the maturity date.
• C) the borrower only has to pay a portion of the loan back.
• D) the borrower has paid back the loan on the maturity date.
• E) the borrower has paid back the loan prior to the maturity date.

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Definitions:

Operating Assets

Assets used by a company in its day-to-day operations to generate revenue, excluding investment and non-operational assets.

Return On Investment (ROI)

Net operating income divided by average operating assets. It also equals margin multiplied by turnover.

Depreciation

The systematic allocation of the cost of an asset over its useful life.

Investment Center

A business unit within a company that is responsible for its own revenues, expenses, and asset investments, with its performance measured by its ability to generate income relative to its assets.