Secured Bonds

question 97

Multiple Choice

Secured bonds:

• A) Are called debentures.
• B) Have specific assets of the issuing company pledged as collateral.
• C) Are backed by the issuer's bank.
• D) Are subordinated to those of other unsecured liabilities.
• E) Are the same as sinking fund bonds.

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Definitions:

Lerner Index

A measure of a firm's market power, calculated as the difference between price and marginal cost, divided by price.

Monopoly Power

The ability of a single supplier to control the market price and exclude competitors.

Elasticity of Demand

An assessment of the degree to which the quantity of a good demanded changes in response to its price movement.

Marginal Cost

The additional expenditure involved in making one more unit of a product or service.