As default risk increases,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 increases, investors will demand a higher return to compensate for the added risk. Therefore, the expected return on corporate bonds decreases, making the return more uncertain as a result of the increased risk.

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