Fisher's study of 366 bond issues found that a larger yield spread was associated with a
A) shorter time with the company having defaulted.
B) smaller market value of debt.
C) smaller amount of historic earnings.
D) larger coefficient of variation of earnings.

Question

Quizplus · Accepted Answer

Fisher's study found that a larger yield spread was associated with a larger coefficient of variation of earnings, indicating greater variability and uncertainty in a company's earnings. This suggests that investors demand higher compensation for the additional risk associated with investing in these companies, resulting in a larger yield spread.

Fisher's Study of 366 Bond Issues Found That a Larger