If the Probability of a Bond Default Increases Because Corporations

question 108

Multiple Choice

If the probability of a bond default increases because corporations begin to suffer large losses,then the default risk on corporate bonds will ________ and the expected return on these bonds will ________,everything else held constant.

• A)decrease;increase
• B)decrease;decrease
• C)increase;increase
• D)increase;decrease

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Definitions:

Environmental Hazards

Potential threats or events in the natural environment that can cause harm to humans or the ecosystem.

Negative Consequences

Undesirable outcomes resulting from an action or decision, impacting individuals or groups negatively.

Sociology

is the systematic study of human behaviour in social context.

Technology

The application of scientific knowledge for practical purposes, especially in industry and everyday life.