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If the Probability of a Bond Default Increases Because Corporations

question 108

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If the probability of a bond default increases because corporations begin to suffer large losses,then the default risk on corporate bonds will ________ and the expected return on these bonds will ________,everything else held constant.


Definitions:

Joint Cavity

The space between the articulating bones of a joint, filled with synovial fluid that lubricates and nourishes the joint.

Amphiarthroses

A type of joint in the body that allows for limited movement, as found between vertebrae.

Synarthrotic Joints

A type of joint that allows for little or no movement, typically found where bones are fused together, such as in the skull.

Synovial Joints

Freely movable joints in the body, characterized by a cavity filled with synovial fluid, which lubricates and nourishes the joint.

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