Use the Following Information to Answer the Question(s)below

question 71

Multiple Choice

Use the following information to answer the question(s) below.
Consider the following information regarding corporate bonds:
-Rearden Metal has a bond issue outstanding with ten years to maturity,a yield to maturity of 8.6%,and a B rating.The bondholders expected loss rate in the event of default is 50%.Assuming a normal economy the expected return on Rearden Metal's debt is closest to:

• A)0.6%
• B)1.6%
• C)4.6%
• D)6.0%

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Definitions:

Private Goods

Goods that are excludable and rivalrous, meaning their consumption by one individual prevents another from consuming them.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be used by everyone and one person's use does not diminish another's.

Government

The organized assembly or body of individuals leading a structured society, typically a nation.

Monopolies

Market structures characterized by a single seller facing no competition in offering a unique product or service.