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

Question

Quizplus · Accepted Answer

An increase in the default risk of corporate bonds makes them less attractive to investors, decreasing their demand (shifting the demand curve to the left). Conversely, investors may see Canada bonds (typically government bonds) as safer alternatives, increasing their demand (shifting the demand curve to the right).

Other Things Being Equal, an Increase in the Default Risk