Which of the Following Statements Is CORRECT

question 69

Multiple Choice

Which of the following statements is CORRECT?

• A) An indenture is a bond that is less risky than a mortgage bond.
• B) The expected return on a corporate bond will generally exceed the bond's yield to maturity.
• C) If a bond's coupon rate exceeds its yield to maturity, then its expected return to investors exceeds the yield to maturity.
• D) Under our bankruptcy laws, any firm that is in financial distress will be forced to declare bankruptcy and then be liquidated.
• E) All else equal, senior debt generally has a lower yield to maturity than subordinated debt.

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Definitions:

Marginal Revenue

The gain in income from selling an additional unit of a product or service.

Marginal Cost

The cost implications of producing an additional unit of either a product or service.

Total Revenue

The total amount of money generated by a business from the sale of goods or services before any expenses are subtracted.

Marginal Revenue

The increased earnings from the sale of one extra unit of a good or service.