Suppose that the number of buyers and sellers of municipal bonds decreases substantially. The result should be a(an)
A)decline in municipal bond yields.
B)increase in municipal bond yields.
C)decline in U.S. Treasury bond yields.
D)increase in the tax rate on municipal bond yields.

Question

Quizplus · Accepted Answer

If the number of buyers and sellers of municipal bonds decreases, this means there is less market activity and demand for these bonds. As a result, sellers may need to increase the yield (interest rate) on the bonds in order to entice buyers to purchase them. This increase in yield corresponds to an increase in municipal bond yields.

Suppose That the Number of Buyers and Sellers of Municipal