Other Things Being Equal, an Increase in the Default Risk

question 7

Multiple Choice

Other things being equal, an increase in the default risk of corporate bonds shifts the demand curve for corporate bonds to the ________ and the demand curve for Canada bonds to the ________.

• A) right; right
• B) right; left
• C) left; right
• D) left; left

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Definitions:

Journal Entries

Records of financial transactions in accounting, indicating the accounts affected, amounts, and descriptions of transactions.

Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing the amount of outstanding stock on the market.

Common Stock

An equity security that represents ownership in a corporation, giving shareholders the right to vote on corporate matters and receive dividends.

Stock Transfer Agent

A third-party firm hired by a company to track and manage its stockholders and transactions, including transfers and issuance of stock certificates.