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:

Aversive Stimulus

A stimulus that is unpleasant or painful, often used to modify behavior through avoidance learning or negative reinforcement.

Negative Reinforcement

The process of strengthening a behavior by removing or avoiding a negative outcome or unpleasant stimulus as a result of the behavior.

Contingent Avoidance

A type of learning where a subject learns to perform a behavior to prevent the occurrence of an aversive stimulus.

Active Avoidance

A learning process in which an organism learns to perform a behavior to prevent or avoid an unpleasant stimulus.