Suppose the Issuer of a Bond Fails to Pay Some

question 112

Multiple Choice

Suppose the issuer of a bond fails to pay some of the interest or principal that was promised to the bondholders.This failure is referred to as a

• A)breach.
• B)default.
• C)risk.
• D)term failure.

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Definitions:

Surplus Amount

The excess of quantity supplied over quantity demanded in a market, often leading to lower prices.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases.

Income Increases

The rise in the amount of money received, typically on a regular basis, for work or through investments.

Law of Demand

A principle stating that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and vice versa.