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.