Which of the Following Statements Is True

Multiple Choice

Which of the following statements is true?

A) A decrease in default risk on corporate bonds lowers the demand for these bonds, but increases the demand for default-free bonds.
B) The interest rate on corporate bonds decreases as default risk increases.
C) A corporate bond's return becomes less uncertain as default risk increases.
D) As their relative riskiness increases, the interest rate on corporate bonds increases relative to the interest rate on default-free bonds.