Catherine, a Citizen of Spain, Decides to Purchase Bonds Issued

Multiple Choice

Catherine, a citizen of Spain, decides to purchase bonds issued by Chile instead of Canadian bonds, even though the Chilean bonds have a higher risk of default. Which of the following might be an economic reason for her decision?

A) Chile has a lower inflation rate.
B) The Chilean bonds pay a higher rate of interest.
C) The Canadian government is more stable than the Chilean government.
D) Chilean bonds have shorter maturity periods than Canadian bonds.