The Default-Risk Premium

question 55

Multiple Choice

The default-risk premium:

• A) Should vary directly with the bond's yield and inversely with its price
• B) Is less than 0 (zero) for a U.S. Treasury bond
• C) Should be lower for a highly speculative bond than for an investment-grade bond
• D) Should vary directly with the bond's yield and the bond's price

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Definitions:

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