Everything else held constant, if the federal government were to guarantee today that it will pay creditors if a corporation goes bankrupt in the future, the interest rate on corporate bonds will ________ and the interest rate on government securities will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Correct Answer:
Verified
Q1: Default risk is the risk that _.
A)
Q2: If the possibility of a default increases
Q3: Canadian government bonds have no default risk
Q4: Which of the following statements is true?
A)
Q6: An increase in the riskiness of corporate
Q10: The spread between interest rates on low
Q11: If a corporation begins to suffer large
Q12: An increase in default risk on corporate
Q12: The risk that interest payments will not
Q19: If the probability of a bond default
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