If bond investors think they lack enough details to evaluate the likelihood of defaults on certain bonds,this will result in higher
A) expected return.
B) liquidity.
C) information costs.
D) expected inflation.

Question

Quizplus · Accepted Answer

When bond investors lack enough details to evaluate the likelihood of defaults on certain bonds, they may incur higher information costs to obtain the necessary information. This is because they may need to conduct extensive research and analysis to obtain the needed details to make an informed decision. Therefore, this will result in higher information costs.

If Bond Investors Think They Lack Enough Details to Evaluate