If a corporation's earnings rise, then the default risk on its bonds will ________ and the equilibrium interest rate on these bonds will ________.

If a corporation's earnings rise, then the default risk on its bonds will ________ and the equilibrium interest rate on these bonds will ________.



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


Answer: B) decrease; decrease


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Marketing Chapter 5

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