Ask Question
BusinessBusiness
18 November, 15:27

If a bond is perceived to be more risky in terms of the ability of the company to repay the debt, then

+1
Answers (2)
  1. 18 November, 16:10
    0
    Complete Question:

    If a bond is perceived to be more risky in terms of the ability of the company to repay the debt, then the bond will have a lower interest rate.

    Answer:

    False

    Explanation:

    The reason is that if higher the risk associated with the security the higher is the return demanded by the investor and vice versa. In this situation the credit risk is higher on the bond investment so the return demanded by the lender would be higher not lower than a bond with normal credit risk.
  2. 18 November, 17:21
    0
    Then it must offer to compensate investors for taking the risk.

    Explanation:

    If a bond is perceived to be more risky in terms of the ability of the company to repay the debt, then it must offer investors higher returns in order to compensate them for the risk they took in buying their bonds.

    However, If the company fails to compensate them, then the investors would shift their interest to other bonds.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “If a bond is perceived to be more risky in terms of the ability of the company to repay the debt, then ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
For Tax Year 2019, amounts are indexed using the Chained Consumer Price Index for All Urban Consumers ("chained CPI"). What impact will this have on 2019 tax returns? a. Taxpayers will end up paying more tax on 2019 tax returns. b.
Answers (1)
Do you think there is a difference between a business lie and a life lie?
Answers (1)
Reasons to study operations management include: a. studying how people organize themselves for productive enterprise. b. knowing how goods and services are consumed. understanding what human resource managers do. c.
Answers (1)
Which is an example of a government monopoly in the United States? the US Postal Service the Internal Revenue Service (IRS) the US Environmental Protection Agency (EPA) the National Park Service
Answers (2)
I am an american rapper, singer, songwriter, record producer, television personality, and actor. i was discovered by Dr DRE and featured on dre's solo debut, deep covered." I was born calvin cordozar broadus JR.
Answers (2)
New Questions in Business
Which of the following is not part of the fraud triangle? A. Perceived opportunity B. Realization C. Rationalization D. Perceived pressure
Answers (1)
When the rate of inflation is equal to the interest rate on beth's deposit, the purchasing power of her depositrises over the course of the year?
Answers (1)
A. Credit scores reflect how likely individuals are to repay their debts. B. Credit scores range from the low 300's to the mid 800's. C. Each person has three credit scores. D. All of the above.
Answers (1)
Which of the following is not a characteristic of intangible assets? (a) They lack physical existence. (b) They are not financial instruments. (c) They are long-term in nature. (d) They are all subject to amortization.
Answers (1)
Run-of-the-Mills provides your marketing firm with the following dа ta: When the price of penguin patties decreases by 20%, the quantity of raskels sold decreases by 22% and the quantity of kipples sold increases by 7%.
Answers (1)
Home » Business » If a bond is perceived to be more risky in terms of the ability of the company to repay the debt, then
Sign Up Forgot Password?