The Promised Yield on a Non-Interest-Bearing Security with One Year

question 24

Multiple Choice

The promised yield on a non-interest-bearing security with one year to maturity,a face value of $100,a 20% chance of default and an expected market rate of return of 10%,is:

• A)7.8%.
• B)37.5%.
• C)25%.
• D)10%.

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Definitions:

Selective Intuition

Relying on gut feelings or instincts when making decisions, but only in certain situations or when considering specific factors.

Selective Perception

The method through which people only acknowledge the aspects of media messages that align with their preferences, disregarding any conflicting perspectives.

Selective Retention

The psychological principle where individuals more likely remember information that is consistent with their beliefs, values, or interests, ignoring contradicting information.

Message Consistency

The practice of ensuring all communications from a brand are uniform, reinforcing the brand's message across different marketing channels.