Risk to Bondholders Comes from

question 54

Multiple Choice

Risk to bondholders comes from
1) possibility of default
2) higher interest rates
3) higher inflation

• A) 1 and 2
• B) 1 and 3
• C) 2 and 3
• D) all of these choices

---

Definitions:

Cartel

An association of independent companies or organizations formed to control production, pricing, and marketing of goods to suppress competition.

Perfectly Competitive

A market structure where there are many buyers and sellers, goods are homogeneous, and there is free entry and exit in the market.

Marginal Cost

The boost in overall cost that comes from generating one extra unit of a product or service.

Quantity Effect

The change in quantity demanded or supplied of a product as a result of changes in its price.