We Would Expect the Interest Rate on Bond a to Be

question 61

Multiple Choice

We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that

• A)the credit risk associated with Bond A is lower than the credit risk associated with Bond B.
• B)Bond A was issued by the Apple corporation and Bond B was issued by the city of Houston.
• C)Bond A has a term of 20 years and Bond B has a term of 2 years.
• D)All of the above are correct.

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Definitions:

Rat Pressing Bar

An experimental setup wherein rats are conditioned to press a bar to receive a reward, often used in studies of behavior and learning.

Dog Blinking

A reflex or voluntary action in dogs to protect their eyes from foreign bodies or express emotions, not a widely recognized behavioral study term.

Law of Effect

Law stating that if an action is followed by a pleasurable consequence, it will tend to be repeated, and if followed by an unpleasant consequence, it will tend not to be repeated.

Thorndike

An American psychologist who developed the law of effect and is known for his work in learning theory and educational psychology.