If the Risk on Foreign Government Bonds Increases Relative to U.S

question 79

Multiple Choice

If the risk on foreign government bonds increases relative to U.S. government bonds, the price of U.S. government bonds should:

• A) not change since U.S. government bonds are free of default risk.
• B) decrease since people will bail out of all government bonds.
• C) increase as the demand for these bonds increases.
• D) not be affected because the two types of bonds are traded in different markets.

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