Bonds with a High Risk of Default Usually

question 237

Multiple Choice

Bonds with a high risk of default usually:

• A) have a longer maturity than do bonds with a low risk of default.
• B) have a shorter maturity than do bonds with a low risk of default.
• C) have to pay a high rate of interest to attract investors.
• D) can pay a low rate of interest and still attract investors.

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Definitions:

Misrepresentations

False statements or claims, made unintentionally or intentionally, that induce someone into a contract or agreement.

Defects

Shortcomings or flaws in products, materials, or documents that can affect their performance or integrity.

Fraudulent Misrepresentation

A false statement of a material fact made knowingly, or without belief in its truth, or recklessly, with the intent to deceive and induce another party to act, resulting in harm.

Punitive Damages

Financial compensation awarded to a plaintiff in a lawsuit that goes beyond what is necessary to compensate for losses, intending to punish the defendant for egregious conduct.