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
A) decrease; increase
B) decrease; decrease
C) increase; increase
D) increase; decrease
D
You might also like to view...
With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers, then positive analysis would consider:
A. whether the surplus transferred from consumers to producers is larger than the consumer surplus lost to deadweight loss.
B. whether the producer surplus lost to deadweight loss is larger than the producer surplus gained from a higher price.
C. whether the surplus transferred from producers to consumers is larger than the consumer surplus lost to deadweight loss.
D. whether the producer surplus lost due to lower prices is larger than the producer surplus lost due to fewer transactions taking place.
On January 1, 2010, a homeowner borrowed $5,000 for a term of six months to complete some home improvements, paying an annual interest rate of 8 percent. How much principal and interest will the homeowner pay back on July 1, 2010?
a. $2,500 b. $2,900 c. $5,200 d. $5,400
Ahmed is going to a film matinee by himself. He purchases a ticket, a jumbo tub of popcorn, a box of Raisinets, and a Slurpee. Which of the following likely has the highest marginal utility for him?
a. a second ticket to the same movie b. a second tub of popcorn c. a second box of Raisinets d. a second straw for his Slurpee
Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?
What will be an ideal response?