In times of economic uncertainty, yields on______ bonds tend to rise and yields on______ bonds tend to fall.
A) junk; AA rated
B) government; corporate
C) corporate; government
D) Treasury; municipal.

Question

Quizplus · Accepted Answer

In times of economic uncertainty, investors tend to move their money into safer assets, leading to a rise in demand for government bonds, which are considered safer compared to corporate bonds. This increased demand for government bonds causes their yields to fall, while the yields on riskier corporate bonds tend to rise as investors demand higher returns for taking on more risk.

In Times of Economic Uncertainty, Yields On______ Bonds Tend to Rise