An increase in the liquidity of corporate bonds will ________ the price of corporate bonds and ________ the yield of Treasury bonds,everything else held constant.
A)increase;increase
B)reduce;reduce
C)increase;reduce
D)reduce;increase

Question

Quizplus · Accepted Answer

An increase in the liquidity of corporate bonds makes them more attractive to investors, leading to an increase in their price. As investors shift their preference towards more liquid corporate bonds, the demand for Treasury bonds decreases, causing their yield to increase.

An Increase in the Liquidity of Corporate Bonds Will ________