[Solved] Corporate Bonds Are Not as Liquid as Government Bonds Because

The collapse of the subprime mortgage market A)did not affect the corporate bond market. B)increased the perceived riskiness of Treasury securities. C)reduced the Baa-Aaa spread. D)increased the Baa-Aaa spread.

The collapse of the subprime mortgage market increased the spread between Baa and default-free U.S. Treasury bonds. This is due to A)a reduction in risk. B)a reduction in maturity. C)a flight to quality. D)a flight to liquidity.

During a "flight to quality" A)the spread between Treasury bonds and Baa bonds increases. B)the spread between Treasury bonds and Baa bonds decreases. C)the spread between Treasury bonds and Baa bonds is not affected. D)the change in the spread between Treasury bonds and Baa bonds cannot be predicted.

If you have a very low tolerance for risk,which of the following bonds would you be least likely to hold in your portfolio? A)a U.S. Treasury bond B)a municipal bond C)a corporate bond with a rating of Aaa D)a corporate bond with a rating of Baa

Which of the following statements is TRUE? A)A liquid asset is one that can be quickly and cheaply converted into cash. B)The demand for a bond declines when it becomes less liquid,decreasing the interest rate spread between it and relatively more liquid bonds. C)The differences in bond interest rates reflect differences in default risk only. D)The corporate bond market is the most liquid bond market.

When the Treasury bond market becomes more liquid,other things equal,the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________. A)right;right B)right;left C)left;right D)left;left

When the Treasury bond market becomes less liquid,other things equal,the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________. A)right;right B)right;left C)left;right D)left;left

A decrease in the liquidity of corporate bonds,other things being equal,shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds shifts to the ________. A)right;right B)right;left C)left;left D)left;right

An increase in the liquidity of corporate bonds,other things being equal,shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds shifts to the ________. A)right;right B)right;left C)left;left D)left;right

A(n)________ in the liquidity of corporate bonds will ________ the price of corporate bonds and ________ the yield on corporate bonds,all else equal. A)increase;increase;decrease B)increase;decrease;decrease C)decrease;increase;increase D)decrease;decrease;decrease