In the United States,government rescues are not as common as in other countries,such as the United Kingdom.Therefore,the risk premium on a given level of debt would be higher for U.S.firms than for firms of the United Kingdom,everything else being equal.

Question

Quizplus · Accepted Answer

This statement is true. Government rescues or bailouts are less common in the United States compared to the United Kingdom and other countries. Therefore, the perceived risk of investing in a US firm would be higher, leading to a higher risk premium on its debt compared to a UK firm.

In the United States,government Rescues Are Not as Common as in Other