Question
If an asset has unlimited down-side returns then its returns can be infinitely negative, so theres no minimum return. If an asset has limited up-side
If an asset has unlimited down-side returns then its returns can be infinitely negative, so theres no minimum return. If an asset has limited up-side returns then its returns have a maximum at some finite number. Which one of the following statements about returns on debt and equity issued by a limited liability company is NOT correct? Assume a zero lower bound on risk free government bond yields. Select one: a. Debt has unlimited up-side returns. b. Debt has limited down-side returns. c. Equity has unlimited up-side returns. d. Equity has limited down-side returns. e. Equity and debt prices must be positive.
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