Multiple Choice
If lenders anticipate no changes in liquidity, information costs, and tax differences, the yield on a risky security should be
A) greater than that on a safe security and the price of a risky security should also be greater than that of a safe security.
B) less than that on a safe security and the price of a risky security should also be less than that of a safe security.
C) greater than that on a safe security and the price of a risky security should be lower than that of a safe security.
D) less than that on a safe security and the price of a risky security should be greater than that on a safe security.
Correct Answer:
Verified
Correct Answer:
Verified
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