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If the Possibility of a Default Increases Because Corporations Begin

Question 57

Multiple Choice

If the possibility of a default increases because corporations begin to suffer losses,then the default risk on corporate bonds will ________,and the bonds' returns will become ________ uncertain,meaning that the expected return on these bonds will decrease,everything else held constant.


A) increase;less
B) increase;more
C) decrease;less
D) decrease;more

Correct Answer:

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