Imagine a Scandal That Finds the Officers of Bond Rating

question 72

Multiple Choice

Imagine a scandal that finds the officers of bond rating agencies have been taking bribes to inflate the rating of specific bonds. This should:

• A) have no impact on the bond market since bond markets are highly efficient.
• B) decrease the demand for all bonds.
• C) increase the demand for U.S. Treasury securities and decrease the demand for corporate bonds.
• D) decrease the risk spread.

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Definitions:

Reproductive System

A system of sex organs within an organism which work together for the purpose of sexual reproduction.

Superficial

Located near the surface of the body or an organ, as opposed to deep or internal structures.

Proximal

Situated nearer to the center of the body or the point of attachment.