Explain how would you eliminate hazard

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Reference no: EM133715959

Question: Imagine there are two possible bonds you want to invest in: Bond X and Bond Z. And let's say that Bond X has a 15% chance of non-payment and Bond X has a 45% chance of failure (loss). In the absence of any further data, you are of course more likely to select Bond A since it provides you with a higher chance of keeping your money. To thrive, Bond Z must boost its interest rates until the reward surpasses the danger of nonpayment. Bond Z can then entice you back despite its increased risk ( Explain how would you eliminate hazard )

Reference no: EM133715959

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