If a country has a poorly functioning risk structure of corporate bond yields,
A)yields on long-term bonds will be relatively low.
B)the country's tax code will have to be adjusted to reflect this.
C)low interest rates will lead to rapid rates of growth in physical capital.
D)corporations will rely more heavily on bank loans and on new equity issues.

Question

Quizplus · Accepted Answer

If the risk structure of corporate bond yields is poorly functioning, corporations will have trouble issuing bonds at reasonable rates. This means that they will have to rely more heavily on other forms of financing such as bank loans and new equity issues to meet their funding needs.

If a Country Has a Poorly Functioning Risk Structure of Corporate