Which of the Following Statements Are True

question 86

Multiple Choice

Which of the following statements are true?

• A) A decrease in default risk on corporate bonds lowers the demand for these bonds, but increases the demand for default-free bonds.
• B) The expected return on corporate bonds decreases as default risk increases.
• C) A corporate bond's return becomes less uncertain as default risk increases.
• D) As their relative riskiness increases, the expected return on corporate bonds increases relative to the expected return on default-free bonds.

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Definitions:

Aggregate Output

The total value of all goods and services produced in an economy within a specific time period.

Prices

The amount of money required to purchase a good or service, which can fluctuate based on supply and demand dynamics.

Labor Force

The total number of people who are eligible and actively looking for work, including both the employed and unemployed individuals.

Discouraged Workers

Individuals who are not actively seeking employment due to believing that no jobs are available for them or there are none for which they would qualify.