As default risk decreases,the expected return on corporate bonds ________,and the return becomes ________ uncertain,everything else held constant.
A)increases;less
B)increases;more
C)decreases;less
D)decreases;more

Question

Quizplus · Accepted Answer

As default risk decreases, investors demand lower returns which causes the expected return on corporate bonds to increase. However, with lower risk, the return becomes less uncertain which means the bond price becomes more stable, resulting in less variability in the return.

As Default Risk Decreases,the Expected Return on Corporate Bonds ________,And