An increase in expected inflation has an ambiguous effect on the risk premium of corporate bonds.

Name: An increase in expected inflation has an ambiguous effect on the risk premium of corporate bonds.
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Question

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An increase in expected inflation can lead to higher interest rates, affecting the risk premium of corporate bonds in various ways, depending on factors like the issuer's creditworthiness and market conditions.

An Increase in Expected Inflation Has an Ambiguous Effect on the Risk