Event Risk Is the Possibility That a Bond Will Experience

question 3

Multiple Choice

Event risk is the possibility that a bond will experience which one of the following?

• A) sudden increase in market value
• B) unexpected call by the issuer
• C) decrease in conversion value due to a sudden decline in the price of the issuer's stock
• D) decrease in credit quality due to a financial or structural change in the bond issuer
• E) decrease in intrinsic value due to an unexpected increase in market interest rates

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Definitions:

Reactive Inhibition

A psychological process where a previously learned response decreases in strength or frequency due to the repeated presentation of a stimulus, leading to fatigue or boredom.

Relaxation Training

A therapeutic technique focusing on teaching individuals methods to reduce stress and physical tension.

Anxiety Hierarchies

A list of fears arranged in ascending order of intensity, used in therapies like systematic desensitization to gradually confront and reduce anxiety.

Systematic Desensitization

A therapeutic technique used to reduce fear or anxiety, by gradually exposing the person to the feared object or context without any danger.