Declining default risk in late 2009 and 2010 led to
A) increase in the price of junk bonds.
B) increase in the yield of junk bonds.
C) increase in yield of Treasury bonds.
D) increase in the price of Treasury bonds.

Question

Quizplus · Accepted Answer

Declining default risk means that there is a lower chance that issuers of junk bonds will default on their payments, making them less risky. Therefore, investors are willing to pay a higher price for junk bonds, leading to an increase in their price.

Declining Default Risk in Late 2009 and 2010 Led to