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  3. 1. suppose the default risk of corporate bonds dec

1. Suppose the default risk of corporate bonds decreases. a, What would be the major...

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Accounting

1. Suppose the default risk of corporate bonds decreases.

a, What would be the major effect?

- Increase in demand for loanable funds (increase in supply of bonds)

- Decrease in demand for loanable funds (decrease in supply of bonds)

- Increase in supply of loanable funds (increase in demand for bonds)

- Decrease in supply of loanable funds (decrease in demand for bonds)

b, Why is so?

2. Suppose the default risk of corporate bonds decreases

a, What would be the major effect?

- Increase in demand for loanable funds (increase in supply of bonds)

- Decrease in demand for loanable funds (decrease in supply of bonds)

- Increase in supply of loanable funds (increase in demand for bonds)

- Decrease in supply of loanable funds (decrease in demand for bonds)

b, Why is so

3. Suppose the Federal Reserve makes a discount loan to a bank

a, What would be the major effect in the market for federal funds?

- Increase in demand for federal funds

- Decrease in demand for federal funds

- Increase in supply of federal funds

- Decrease in supply of federal funds

b, Why is so?

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