(I)An Increase in Default Risk on Corporate Bonds Shifts the Demand

question 25

Multiple Choice

(I) An increase in default risk on corporate bonds shifts the demand curve for corporate bonds to the right.
(II) An increase in default risk on corporate bonds shifts the demand curve for Treasury bonds to the left.

• A) (I) is true, (II) false.
• B) (I) is false, (II) true.
• C) Both are true.
• D) Both are false.

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