Researchers Have Found a Positive Relationship Between Default Spread and Stock

Researchers have found a positive relationship between default spread and stock returns in the long run because a large default spread implies a

A) high risk premium and higher expected returns.
B) high risk premium and lower expected returns.
C) low risk premium and higher expected returns.
D) low risk premium and lower expected returns.
E) low risk premium and the same expected returns.

Correct Answer:

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