Author Question: Why is it useful to make a distinction between debt and equity instruments? What will be an ideal ... (Read 106 times)

elizabeth18 · **on:** Jun 30, 2018

Why is it useful to make a distinction between debt and equity instruments?

What will be an ideal response?

Question 2

In general, one would expect that life expectancies reflect international differences in income levels. Do the data support such a claim?

A) Average life span falls as relative poverty falls.
B) Average life span increases as relative poverty falls.
C) There is no statistically significant relationship between the two.
D) The relation is not very strong.
E) The relationship looks more like a U-shape.

k2629 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Debt instruments such as bonds and bank deposits are repaid regardless of economic circumstances. Equity instruments, like a share of stock, have a payoff that is linked to economic performances. However, remember the possibility of bankruptcy and the real return, which is subject to domestic currency fluctuations.

Answer to Question 2

B