The spread between the interest rates on bonds with default risk and default-free bonds is called the risk premium.
举一反三
- (I) The risk premium widens as the default risk on corporate bonds increases. (II) The risk premium widens as corporate bonds become less liquid.
- Bonds with relatively high risk of default are called ________
- (I) The risk premium widens as the default risk on corporate bonds increases. (II) The risk premium widens as corporate bonds become less liquid. A: (I) is true, (II) false. B: (I) is false, (II) true. C: Both are true. D: Both are false.
- Interest rates on banker’s acceptances are low because the risk of default is very low.
- Which of the following risks can be diversified through portfolio investment? _____. A: Interest rate risk B: Inflation risk C: Market risk D: Default risk