Other things being equal,a decrease in the default risk of corporate bonds shifts the demand curve for corporate bonds to the ________ and the demand curve for Treasury bonds to the ________.
A)right;right
B)right;left
C)left;right
D)left;left

Question

Quizplus · Accepted Answer

A decrease in the default risk of corporate bonds makes them more attractive to investors, shifting the demand curve for corporate bonds to the right as investors are more willing to buy them. Conversely, this makes Treasury bonds relatively less attractive, shifting the demand curve for Treasury bonds to the left as investors shift their preferences towards corporate bonds.

Other Things Being Equal,a Decrease in the Default Risk of Corporate