When bonds become more widely traded,and as a consequence the market becomes more liquid,the demand curve for bonds shifts to the ________ and the interest rate ________.
A) right; rises
B) right; falls
C) left; falls
D) left; rises

Question

Quizplus · Accepted Answer

When bonds become more widely traded and the market becomes more liquid, the demand for bonds increases, shifting the demand curve to the right. This increased demand typically leads to a lower interest rate, as investors are willing to accept lower yields in exchange for the added liquidity and lower risk associated with more frequently traded bonds.

When Bonds Become More Widely Traded,and as a Consequence the Market