When the default risk on corporate bonds decreases,other things equal,the demand curve for corporate bonds shifts to the ________ and the demand curve for Treasury bonds shifts to the ________.
A) right; right
B) right; left
C) left; left
D) left; right

Question

Quizplus · Accepted Answer

When the default risk on corporate bonds decreases, investors find corporate bonds more attractive, leading to an increase in demand for corporate bonds (shift to the right) and a decrease in demand for comparatively safer Treasury bonds (shift to the left), as investors switch from Treasuries to corporate bonds.

When the Default Risk on Corporate Bonds Decreases,other Things Equal,the