Kitten6330 Kitten6330
  • 13-01-2021
  • Business
contestada

when investors doubt the creditworthiness of a borrower, what should happen to the price and yield of a bond

Respuesta :

andromache andromache
  • 15-01-2021

Answer:

Prices go down, yield go up

Explanation:

As we know that there is an opposite relationship between the price of the bond and the yield that means if the creditworthiness comes in a doubt so it reduced the price of the bond and at the same time it increased the yield

So as per the given situation as the investor doubt the borrower creditworthiness so the price would fall and yield would go up

hence, the same is to be considered

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