Explain the relationship between the interest rate on a bond and the default risk on a bond
What will be an ideal response?
With bonds, the higher the default risk, the higher the interest rate, and the lower the default risk, the lower the interest rate.
You might also like to view...
Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a price ceiling that is 10 percent below the market clearing price?
A More information is needed. B A shortage equal to 1.8 percent of the market clearing quantity C A shortage equal to 0.6 percent of the market clearing quantity D A shortage equal to 18 percent of the market clearing quantity E A shortage equal to 6 percent of the market clearing quantity
The production possibilities frontier model assumes all of the following except
A) the level of technology is fixed and unchanging. B) any level of the two products that the economy produces is currently possible. C) labor, capital, land and natural resources are fixed in quantity. D) the economy produces only two products.