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    Exam 5: How Do Risk and Term Structure Affect Interest Rates?
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    If a Corporation Begins to Suffer Large Losses,then the Default
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If a Corporation Begins to Suffer Large Losses,then the Default

Question 18

Question 18

Multiple Choice

If a corporation begins to suffer large losses,then the default risk on its bonds will ________ and the equilibrium interest rate on these bonds will ________.


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

Correct Answer:

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