Junk Bonds Are Those Bonds with a Credit Rating Of

question 47

Multiple Choice

Junk bonds are those bonds with a credit rating of:

• A)BB and lower.
• B)B and lower.
• C)BBB and lower.
• D)None of these.

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Definitions:

Shortage Costs

Expenses incurred from inventory deficits, including lost sales and additional costs for expedited shipping.

Adjustment Costs

Expenses incurred in the process of modifying a business operation or strategy, including restructuring or equipment changes.

Transaction Motive

The need to hold cash for the purpose of conducting day-to-day business operations.

Float Management

The practice of managing the time difference between the writing of a check and its clearing at the bank, aiming to optimize the use of available funds.