Consider the price paid for debt issued by the State of California. Which of the following would lead to a decrease in the value of State of California bonds?

A. The State of California pays back its previous bonds ahead of schedule.
B. The State of California bonds have a shorter maturity.
C. The State of California bonds are in small dollar amounts.
D. The State of California experiences a fiscal crisis that makes it less likely it will be able to honor its interest payments.


Answer: D

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