An Increase in Default Risk on Corporate Bonds ________ the Demand

question 31

Multiple Choice

An increase in default risk on corporate bonds ________ the demand for these bonds,but ________ the demand for default-free bonds,everything else held constant.

• A)increases;lowers
• B)lowers;increases
• C)does not change;greatly increases
• D)moderately lowers;does not change

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Definitions:

Residuals

Differences between observed values and the expected values predicted by a model, used as a diagnostic measure to assess the fit of a statistical model.

Least Squares

A method used in regression analysis to determine the best fit line by minimizing the sum of the squares of the differences between observed and predicted values.

Goals/G

A statistical measurement often used in sports to quantify the average number of goals scored per game by a team or player.

Linear Regression

A statistical method used to model the relationship between a dependent variable and one or more independent variables, assuming a linear relationship.