Which of the Following Statements Is Correct

question 99

Multiple Choice

Which of the following statements is correct?

• A)All else being equal, secured debt is more risky than unsecured debt.
• B)The expected return on a corporate bond must be more than its promised return if the probability of default is greater than zero.
• C)All else being equal, senior debt has more default risk than subordinated debt.
• D)A company's bond rating is affected by its financial ratios and provisions in its indenture.

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Definitions:

Exert Leverage

The act of using one's advantage or influence to affect or sway outcomes in a desired way.

Particular Negotiation

A negotiation that is specific to a certain context, situation, or set of circumstances.

Designated

Denotes something that has been officially assigned or specified.

Positions And Interests

Refers to the respective stances or views held by parties in a negotiation (positions) and the underlying desires or needs that motivate these stances (interests).