The Two Different Types of Node on a Decision Tree

question 54

Multiple Choice

The two different types of node on a decision tree are:

• A)information and decision nodes.
• B)information and uncertainty nodes.
• C)uncertainty and decision nodes.
• D)go to meet and stay home nodes.

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Definitions:

Convertible Bonds

Security that is convertible into shares of common stock, at a fixed price, at the option of the bondholder.

Subordinated Debt

A type of debt that ranks below other debts with regard to claims on assets or earnings in the event of a liquidation.

Junk Bonds

High-yield but high-risk bonds issued by companies or entities with lower credit ratings, indicating a higher risk of default.

Zero Coupon Bonds

Pay no coupons at all, but are offered at a substantial discount below their par value and hence provide capital appreciation rather than interest income. Sometimes referred to as “stripped bonds.”