Because a Bond's Rating Serves as an Indicator of Its

question 135

Multiple Choice

Because a bond's rating serves as an indicator of its default risk, the rating has a direct, measurable influence on the firm's:

• A)earnings per share and thus the dividends it pays each year.
• B)cost of using such debt and thus the bond's interest rate.
• C)ability to procure raw material for production.
• D)tax liability to the federal government.
• E)current assets and the bond's maturity value.

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Definitions:

Operations Research

The application of advanced analytical methods to help make better decisions, using techniques from mathematics, science, and engineering.

Mathematical Techniques

Refer to the quantitative methods and models used to solve problems and make decisions in fields such as operations research, finance, engineering, and economics.

Hawthorne Studies

A series of experiments conducted in the 1920s and 1930s that highlighted the impact of work conditions, social factors, and employee attitudes on productivity.

Social Factors

Aspects of society and culture that influence individuals' behaviors, actions, and preferences.