Holding everything else the same, if a corporation's earnings rise, then the default risk on its bonds will ________ and the expected return on those bonds will ________.

Holding everything else the same, if a corporation's earnings rise, then the default risk on its bonds will ________ and the expected return on those bonds will ________.



A) increase; decrease
B) decrease; decrease
C) increase; increase
D) decrease; increase


Answer: D) decrease; increase


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