The Default Premium Reflects The

question 7

Multiple Choice

The default premium reflects the:

• A)ratio of the total risk premium of a bond to the total costs of bankruptcy of the issuing firm.
• B)probability and cost of the firm's bankruptcy.
• C)ratio of the total risk premium of a bond to the yield on a bond with no default.
• D)additional return on a bond for liquidity shortcomings.

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Definitions:

Feelings of Guilt

Emotions experienced when an individual believes they have done something wrong or against moral codes.

Poor Concentration

A state of difficulty in focusing one's attention consistently on a given task or activity.

Hopelessness

A feeling or state in which a person perceives little or no optimism about the future or their ability to achieve their goals.

Severe Depression

A major depressive disorder with intense symptoms that substantially impair an individual's ability to function in daily life.