Which of the following is a correct statement about interpreting an increase in risk premiums?
A) An increase in risk premiums results only from expectations of greater default risk.
B) An increase in risk premiums results only from expectations of lower liquidity.
C) An increase in risk premiums results only from expectations of higher information costs.
D) An increase in risk premiums can result from expectations of greater default risk, lower liquidity, or higher information costs.
Correct Answer:
Verified
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