Which of the Following Statements Is True

question 26

Multiple Choice

Which of the following statements is true?

• A) A decrease in default risk on corporate bonds lowers the demand for these bonds, but increases the demand for default-free bonds.
• B) The interest rate on corporate bonds decreases as default risk increases.
• C) A corporate bond's return becomes less uncertain as default risk increases.
• D) As their relative riskiness increases, the interest rate on corporate bonds increases relative to the interest rate on default-free bonds.

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Definitions:

Kelly Johnson

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