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:

Expectation

The belief or anticipation about what should happen or what someone should achieve in the future.

Bad News Message

Communication that delivers unfavorable or disappointing information to the recipient.

Direct Format

A straightforward and clear approach in writing or layout that presents the main point or conclusion at the beginning.

Handling Bad News

Techniques or strategies used to communicate unfavorable information in a way that minimizes negative reactions.