If the risk on foreign government bonds increases relative to U.S. government bonds, the price of U.S. government bonds should:
A) not change since U.S. government bonds are free of default risk.
B) decrease since people will bail out of all government bonds.
C) increase as the demand for these bonds increases.
D) not be affected because the two types of bonds are traded in different markets.
Correct Answer:
Verified
Q92: The market for bonds is initially described
Q93: The market for bonds is initially described
Q94: The demand for U.S. government bonds is
Q95: Suppose a family member approaches you to
Q96: Consider a one-year corporate bond that has
Q98: Interest-rate risk would not matter to which
Q99: U.S. government bonds that provide for bondholders
Q100: The market for bonds is initially described
Q101: Calculate the price of a $1,000 face
Q102: The U.S. Treasury offers several ways to
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents