If the federal government were to guarantee payment on municipal bonds,the price of municipal bonds would ________ and the yield on U.S. Treasury bonds would ________,all else equal.
A)increase;increase
B)increase;decrease
C)decrease;decrease
D)decrease;increase

Question

Quizplus · Accepted Answer

If the federal government were to guarantee payment on municipal bonds, the price of municipal bonds would increase because they would be seen as less risky. This would lead to a decrease in the yield on U.S. Treasury bonds, as investors would be less likely to demand a higher return for a less risky investment.

If the Federal Government Were to Guarantee Payment on Municipal